Credit Cards: The Pros And Cons Of Using Plastic For Everyday Purchases

Most people make small purchases every day, like a cup of coffee or a lunch while at work, not to mention groceries and other everyday needs. There are several possible to ways to pay for everyday expenses, including credit cards. Using credit cards for everyday purchases has several pros and cons you should be aware of:

Pro: Safer Than Carrying Cash

Using a credit card is safer than carrying cash. Thieves are less likely to target people using credit cards since it can be harder to obtain and it’s easily traced. Additionally, banks provide a number of different protections if a credit card is stolen and used to make fraudulent purchases. Credit cards can also be canceled and replaced if lost.

Con: It Is Easy To Go Into Serious Debt

It is very easy to fall into serious debt by using credit cards every day. Credit cards make impulse purchases more likely. Balances from one month to the next can grow significantly over time. A few months of excess spending could take a year or more to repay and could destroy credit. If you go into debt, it’s important to consider credit counseling, says the experts at A C Waring & Associates Inc. Consider only using one credit card, or go back to cash and checks if you have a problem with overspending.

Pro: Easier To Track Daily Spending

All of the purchases that are made with a credit card during the day can be reviewed through an online account or a monthly statement. This makes it much easier to review spending and develop a budget based on real numbers. Tracking daily spending is not as easy with nothing but a collection of random receipts or counting your change. Keeping a good record of your spending is essential to stick within your budget, and know what you are spending too much on. With credit card purchases, it is very simple to import transactions into an online tracking program.

Con: Interest Rates Makes Purchases More Expensive

Making a purchase with a credit card and allowing the balance to carry over into the next month means interest is added. Interest makes every credit card purchase more expensive. The price of simple everyday items could increase dramatically when several months of interest are factored in. Again, credit cards gives puts you in the mindset that you can always pay it back later, when in reality, you will be paying much more than the initial purchase.

Pro: Build a Good Credit History

Using a credit card for daily purchases and then paying down most of the balance every month can help to build a good credit history. Actively using credit can increase scores over time. This is difficult to do when using credit cards infrequently. The best way to use a credit card is to use it for purchases that you can pay off by the time the bill comes around. You shouldn’t spend more than you can afford just because a credit card allows you to do so. Used correctly, you can build good credit.

Con: Credit Cards Could Have Extra Fees

Some credit cards could have extra fees attached for purchases and maintenance. There might be a monthly or yearly account fee. There might be unexpected fees for purchases at certain retail stores. There is also the risk of late fees. These fees are a not usually a problem when using cash or some other payment methods.

Credit cards have several benefits and provide access to money that might not be in a bank account yet. They also come with many different pitfalls that could lead a person directly into debt. It is important to consider all the pros and cons before deciding to use a credit card for everyday purchases.

Tags: Credit card, Credit history, Debt, Personal Finance

Category: Credit Card