Showing posts with label credit score. Show all posts
Showing posts with label credit score. Show all posts

Tuesday, 16 February 2021

Should I Get a Credit Card?

Credit cards can be useful and convenient for paying for goods and services. They are, however, a way to get quickly and deeply into debt. The high rates of interest and a low minimum repayment can create problems for borrowers. Debt can grow, and many have found themselves buying things on impulse they can't afford. With crimpling repayments, people tend to borrow more and as they make those repayments and end up living on them until they can borrow no more. 

Credit card debt is one of the most common debt problems in the developed world. The cards are very profitable for banks as they make money from the high-interest charges and the transaction fees they charge the retailers. You can tell this from the many adverts for credit cards and the retailers who tempt you to take out their cards when you shop. 

Credit card debt is toxic and out of all the ways to borrow is one of the easiest ways to get into difficulties. We should all try to avoid debt if we want financial stability and long-term peace of mind. There are a few reasons to have a credit card if you have the self-control to use it in the right way.

Credit Card Consumer Protection

The first reason that I use one is for consumer protection. When spending over £100 on an item, the credit card company legally (UK laws) assumes responsibility for merchantable quality and delivery. If the purchase turns out to be faulty or you don't receive it, you can claim a refund from the card company if the retailer doesn't pay you back. Of course, the best way to use this is when you have the cash to immediately settle the credit card and pay no interest. 

Another benefit to cards is if you spend online with a debit card and the card then gets used fraudulently it can leave you seriously in trouble with your bank freezing your funds until they can rectify the issue. If your credit card is stolen or cloned, it's not technically your money that the criminals are using. As long as you have taken proper precautions, you are not liable. 

Credit Cards Abroad

Another reason that many will find advantageous to use a credit card is that you will usually get a better exchange rate when travelling abroad. Plus, you get the added security of not having to carry cash or someone cloning your debit card.

There will be some readers who will add advantages such as points for every pound you spend and if you do all your shopping with your credit card thas could add up to a reasonable sum at the end of the year. Whilst this is true, the danger of spending too much far outweighs the gain. It is a known fact that even if people have sufficient cash to cover their purchases, they are more likely to spend more than they intended.

In answer to the question, should I get a credit card? My view is 'yes' if you have the self-control to only use it to buy things you have saved for, give you the consumer protection and security of not carrying cash when large amounts required.

What do you think about using credit cards? Please leave a comment in the box below. 

See also my post - The Danger of Debt