Advantages and Disadvantages of Having A Credit Card

credit cardConsidering if investing in a credit card is a smart decision for you? Money MindEd is here to help you determine if now is the right time to invest. Here is our list of advantages and disadvantages to owning a credit card.


Building Credit: The greatest advantage that comes along with proper credit card use is building a good credit history. Credit is based on how long you have had credit and how reliable you are with making monthly payments. Starting to build credit early as a teenager or college student can help you in the future when you need a loan.

In Case of Emergency: Having a credit card can serve as an advantage in the event of an emergency. A credit card can help when you suddenly have to pay hundreds of dollars to have your car repaired. It will give you extra time to save up and pay for any charges.

Education: Having a credit card as a teenager or college student can teach you a lot about financial management, especially the importance of paying bills on time. Getting a head start on managing your money now will only help you in the future.


Spending Temptations: Making purchases with a credit card can feel as though you are not even spending money, you do not have to hand over cash nor is the amount taken out of your account. Instead you receive a bill with the total of your purchases at the end of the month, which may be more than you were expecting. Not being able to pay off your credit card bill at the end of the month can lead to debt, late fees, and bad credit.

Credit Card Fraud: Having a credit card means a possibility for your account information to be stolen, allowing someone to make purchases on your credit card without your knowledge. It is therefore important to monitor your account to ensure that there are no unfamiliar charges.

Interest Rates: Making large purchases on a credit card beyond what you can afford for a month can cause you to pay much more than you planned. If you decide to make a $300 purchase but cannot pay in full at the end of the month, the credit card company will charge you interest for the time that it takes you to pay it off. Your $300 purchase will end up costing you closer to $350.