Credit Card Benefits and Risks

Credit cards can be a major financial asset in certain situations. But when used unwisely, or when misunderstood, credit cards can land a consumer in a tough financial situation. Below are some primary benefits and risks associated with credit cards of all types, regardless of issuing bank or processing company.

Benefits of credit cards

  •  Easy access to credit when personal cash is unavailable Easy use for online transactions
  • Once you pay it down or off, you have access to that credit again – no reapplying
  • Accepted almost everywhere as a form of payment
  • Balance transfer capabilities (when you have them) allow you to transfer balances away from cards with higher interest rates to cards with lower rates
  • Can help to build a solid credit history and rating


  • High APRs/Interest Rates
  • Can prolong the time it takes to pay down your balance
  • Can cause you to pay much more in interest than your original purchase price

Various fees

  • Annual membership fees
  • Maintenance fees
  • Over the limit fees
  • Balance transfer fees
  • Other fees, varying by issuing bank and credit agreement

There are many benefits to having and using a credit card, but there are also dangers or disadvantages. It is critical that all consumers full understand the terms and conditions for any credit card they are considering, including interest rates, fees, etc. Also, utilize credit cards sparingly. Always use cash when available, and use credit cards sparingly only when you absolutely need to. If you do use a credit card and accrue a balance, make an effort to pay down the balance as quickly as possible – try to avoid making only the minimum payments. By doing these things, you can keep yourself out of credit card trouble while still building your credit rating. Nadya Suleman

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