Guide on Credit Card Disadvantages Cardholders Must Keep in Mind
CREDIT CARD DISADVANTAGES – Here are five (5) potential drawbacks of credit cards which cardholders must consider.
One of the most popular finance product offer of most banks is credit card. In fact, most banking entities in the Philippines have multiple credit card offers that come with different features. However, before applying for one or in having one, it is best to know the considerations.
Truth be told that many people are hesitant in having or applying for a credit card because of the experiences of other credit card holders. However, the truth is there are really a lot of credit card benefits and you only get to savor them when you know how to use your card right and to consider the factors stated below.
Temptation to Overspend
Having a credit card means having an access to a lot of merchants, establisments, services, and the purchase of many products. You can simply get that gadget with a price that is within your credit limit and have your card swipe and then it’s done.
However, if you do not one to be like the individuals who had bad experiences with their credit cards after they were left in debt, it is important to always keep in mind to only use it on things you can afford to pay.
High-Interest Rates
Credit card interest rates can be as high as 30% thus it is important to pay your due on time. Also, as much as possible, do not settle with partial payments such as paying only the minimum amount required by the bank. It can trap you with high interest.
Big Annual Fees
Also one of the credit card disadvantages are the fees that you must consider. There are credit cards with big annual fees so it is important to carefully choose which credit card suits not only your lifestyle but as well as your budget. It is a jackpot to have a card with no annual fees. If you are not using your card but you still have to pay for the annual fees, it is best to think again about continuing it.
Hurt your Credit Score
This factor goes both ways — a good usage of your credit card can boost your credit score while not paying your due on time and settling on growing interest may hurt it. Going beyond your credit limit will also not help in boosting your credit score.
Hidden Costs
There are credit cards with hidden costs that before you know it, it has already piled your debts for you. Thus, it is important to really check all the details of your card or before applying for one.