What are the main advantages of credit cards?
The main advantages of credit cards are quick access to extra money for free of charge and safety abroad.
If you find a great bargain or something expensive that you can not afford because you do not have the money at hand or enough in the bank, you can pay with a credit card. You pay the card issuer back as quick as you have the money at hand, or if needed, spread the repayment over several months. Moreover, most credit cards offer interest free periods. That means that you will not pay any interest for using the credit card as long as you clear your balance within the interest free period, which normally is around a month from the day you make a payment with your credit card. The interest rate after the interest free period is normally high – often around 18 percent p. a.
When going abroad credit cards can be very useful. They are widely accepted over the world, whereas cash is usually only accepted in one country. The downside is that the issuer of the credit card usually charge fees for transactions abroad. So always check the cost before using your credit card abroad. The same goes for cash withdrawal. It is also more secure with a credit card, because if you lose your card you can call the issuer to get it suspended and order a new card.
In general, there are also distinctive advantages for different types of credit cards such as special insurances free of extra charge, cash backs etc.
What should I know regarding possible disadvantages?
There is often a high interest if you do not pay back in time. When you pay with your credit card, you are actually borrowing money from the credit card provider. You buy today with money loaned, and you repay the money later. There is one risk here, and that is if you do not repay what you have borrowed in time. If you pay back too late, the interest rates will be high, and the debt can grow fast. To prevent losing control of any credit card debt; repay in time, and if you are late, repay as much as you can manage each month.
Are there any hidden costs?
In addition to an interest rate, you could be charged with other fees when using credit cards. This is especially if you repay too late, if you withdraw money from ATMs or if you exceed your credit limit.
Despite detailed research we can not guarantee the accuracy or completeness of the information provided.