credit card
Credit & Debit Cards

Could you benefit from a credit card?

While owning a debit card is vital when it comes to issues surrounding personal finance, credit cards can represent elusive and uncharted territory for many young adults. Indeed, the idea of racking up credit card debt can be a scary prospect if you are used to the immediacy of debit transactions, particularly if you are liable to lose track of how much you are spending. However, there are also plenty of benefits to owning a credit card that you may not be aware of. The following list weighs up to pros and cons of credit card ownership to help you decide whether it is for you:

The advantages

Credit cards can help spread the costs of big purchases

If you have a big purchase coming up such as a new piece of technology, you may want to spread the cost over a few months to lighten the impact it will have on your bank account at a given time. There are plenty of credit card options out there that offer 0% interest for a certain period of time as an introductory offer, allowing you to conveniently pay off a substantial sum without incurring any extra costs.

Improve your credit rating

If you keep up with monthly payments, keep your balance low and avoid incurring too much interest on your credit cards, you will be able to build up a decent credit score. This is important if you want to apply for a mortgage or a loan in future.

Credit cards are a lifeline in an emergency

While it’s best to save money to help you in case of an emergency, a credit card may be your next best option.

The disadvantages

It’s easy to overspend on a credit card

For those who give in to temptation easily, a credit card may not be a good idea. Indeed, spending on credit can trick you into thinking you have more money than you actually do, which could spell disaster if you’re not good at evaluating the long-term consequences of your actions.

Interest and fees can rack up

The interest and fees associated with credit cards can be large if you don’t have a handle on all of the terms and conditions. Make sure you shop around and double check the small print before you start spending.

Improper use could wreck your credit score

While a credit card could help improve your credit score, it could also send it plummeting in the opposite direction. If you continually run up big balances and fail to pay them off on time, your credit score will be impacted and could jeopardise your eligibility for financial products in the future. Ultimately, how well you fare with credit comes down to your maturity and capacity for self-discipline, and only you will know whether you are ready to exercise these qualities.


Written by Louisa Hann


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