Despite the fact that these days people are increasingly getting credit cards and actively using them in everyday life, credit cards still have a number of shortcomings. Credit cards are becoming a widespread way of payments and lots of casinos are starting to accept deposits with credit cards, as well as shops and even small stores confirm this point. However, credit cards have several disadvantages, that may force you to overpay, or even lose your money.
Credit cards force you to overpay
It's tempting to spend more than you can afford. Credit cards increase your purchasing power and create the illusion that you have more money than you really do. Studies have shown that people spend more on credit cards, while it is psychologically harder for people to "break up" with cash or debit cards.
Credit cards reduce your future income. Every time you use a credit card or any other form of debt, you are dealing with money that you have not yet earned. Therefore, part of your future income will need to be used to pay off your credit card debt.
The terms of the loan may be misleading. Most people without financial or legal education sometimes find it difficult to understand all the nuances of the loan program and the legal wording in the loan agreement. This can result in additional costs for the use of credit money, loan delinquencies, missed benefits of not using the discount and bonus system, and other negative aspects.
Fees and interest in using a credit card can be very high. Depending on the type of credit card and how it is used, the effective interest rate on your credit card may be significantly higher than the average market interest rates. That's why understanding your credit card conditions is so important: so you know how to avoid overcharging your credit card.
Credit cards risks
Credit card fraud risk. Having a credit card exposes you to the risk of fraudulent credit card transactions. Attackers do not even need to steal your credit card to access it. They can hack into the shop where you shop or the websites where you used your credit card to steal the necessary credit card information for fraudulent purchases. (Generally, you will not be responsible if you report unauthorized expenses to the bank immediately.)
Sometimes a complicated credit card recovery. Especially these delays with the bank will be overhead if you are abroad and the loss/theft/theft attempt to hack your credit card occurred there. The fact is that some banks require the cardholder to arrive to recover your card and/or you need to do a number of recovery procedures.
Accumulation of debts. You accumulate debt every time you use your credit card. You can prevent the debt from growing by zeroing the debt every month, but if you pay only the minimum payment and continue shopping, your debt will only accumulate (see Why you shouldn't use your entire credit card limit).
Excessive use of your credit card can worsen your credit rating, and if you have outstanding debt, it can negatively affect your credit history.
If you decide to part with the card, after you restore the credit limit, you will not be lazy to make sure that your account is really empty. You should do this one month after the deposit by requesting written confirmation from the bank. Remember that even a kopeck debt can result in severe fines and penalties, as well as damage to your credit history.
All in all
So when using a credit card, remember the pitfalls of using, carefully read the card agreement, do not forget to pay off your debts on time. Before making the desired credit card several times think about its disadvantages. Even if there are more pluses, do not lose your head, and it is reasonable to choose the best bank offer.
