A credit card can be a useful item to have, but it can also be destructive to your life if you are not careful. Owning this little piece of plastic has its pros as well as its cons. How it is used can determine whether or not your financial standing is excellent or whether it less than pristine.
A benefit to having a credit card is that you can have it on hand in case an emergency arises. As beneficial as it is can be, you must be able to distinguish between a real and a fake emergency. For example, using it to pay for an immediate surgery that your insurance does not fully cover is an emergency; a new purse is not.
Another benefit to having a credit card is that it can help build your credit score. There is a catch, however, because simply having the credit card is not enough. In order for your credit card to work in your favor, you have to make payments on time. How much debt you have accumulated counts as well, so avoid carrying a balance. If used the correct way, your credit card can be a useful tool in helping you obtain a good credit score.
While many people use their credit card responsibly, there are those that are enthralled with instant gratification and purchase items that they cannot afford to buy. Some buy thousands of dollars of products, then get the bill and become overwhelmed because they cannot afford to pay it. Instead of paying off the balance each month, they pay the bare minimum. Even though they make their payments on time, the interest accumulates which forces the balance to increase. Before they know it, they are in over their heads with credit card debt and it becomes a serious problem. Unfortunately, this is a common disadvantage of having a credit card.
An obvious downside to having a credit card is that you put yourself at risk for identity theft. When you buy online or from a store, you are putting your faith in the security measures of the company and the individual employees. All you can do is hope that your information will not end up in the wrong hands. Make sure to shred any personal paperwork that has credit card numbers on it and read your statements carefully. Also, be aware of any companies that you have purchased through that have had security issues, for example, an employee that stole customer’s personal information. In addition, check your credit report once a year without fail.
While having a credit card has both its pros and cons, it is up to you to use it wisely. Contrary to the thoughts of some, owning one is a big responsibility. When used correctly, a credit card can be a quite beneficial item to have in your wallet.