The credit card is an automatic advanced card, when you use it, you can get the products you bought without paying for it yet. Credit cards are a widely used source of convenient credit for restaurants, hotels, mail order, online shopping, gas stations, grocery stores, dental and medical care, church bazaars, as well as products advertised on the phone and television. There are many advantages and disadvantages to using credit cards, but the consequences of misusing them can be drastic and painful.

Advantage

Credit cards eliminate the need to carry large sums of cash

If you’re out and about without cash, you can often receive a cash advance or have the option of purchasing traveler’s checks with a credit card.

Places that are suspicious of personal checks often accept credit cards.

Credit cards act as a short-term loan if you find something that’s a bargain and don’t have the cash or checking account balance to pay for it.

If you’re moving to a new place, credit cards give you purchasing power until you establish yourself as a good risk in a new community.

If you charge for an item or service that costs $50 or more in Colorado (or within 100 miles of your home) and later discover it doesn’t work or have other problems, you can hold payment from the credit card company if you’ve tried to resolve the issue with the merchant.

You often get the best exchange rates when traveling to foreign countries if you use your credit card for purchases and your ATM card for cash. Check with your card issuers about surcharges before you travel. A two to three percent overload can eliminate this advantage.

Credit cards can help coordinate receipts for tax purposes.

Accounting is reduced to a monthly invoice unlike checks.

Disadvantages

Some people have been scammed by giving their credit card numbers to dishonest telemarketers.

It becomes a loan when the credit matures and you do not pay it back.

Adding monthly interest charges means you pay more for goods and services.

Consumers often have more than one credit card, and each has a credit limit. When the credit limits of all the cards are added together, the total can be thousands of dollars. Consumers may fall into the habit of using credit cards to increase their income.

Credit cards are easier to use than borrowing, even when a loan from a credit union, bank, or other financial institution can provide the funds at a lower interest rate.