Advantages & Disadvantages of Credit Card Along with Some Safety Tips To Use Credit Card Wisely

Advantages & Disadvantages of Credit Cards: Nowadays, credit cards have become a part of our life due to their convenient payment options. But still, there are some people who are afraid of using it and there are some people who are misusing it without knowing its value. By using credit cards properly, they can be used as the best financial tool. If you are thinking to apply for a credit card, check out this article.

Look into the article below, as it explains about advantages and disadvantages of credit cards along with other detailed information about credit cards like what is credit card and how it works. Read on to learn more!!!

What is Credit Card? How Credit Card Works?

A credit card is simply a financial instrument that was operated by a line of credit or on the principles of borrowing. You can use the card for any transaction with a certain amount limit. In credits card, we have different types like consumer, secured, business, charge, digital and many others.

Normally, these credit cards can be used for hotel bookings, online shopping, petrol pumps, and everywhere. It just works like you use a debit card and these payments you need to pay to the bank by the end of the month as you will get a credit card bill whereas with a debit card you use the funds you already saved for many months.

If you fail to pay that credit card bill on a certain period of time, you need to pay extra charges to the bank.

Advantages & Disadvantages of Credit Cards

As credit cards became a must-have financial tool these days, knowing the pros and cons of them is also necessary as many of us not are misusing them and ending up in credit card debts. Even these advantages and disadvantages will be helpful for people who are looking to take a credit card.

Advantages Of Credit Cards

Look into some of the advantages of credit cards that give you clarity about why you need to take a credit card. Check out the below carefully.

Buy Now Pay Later

One of the main reasons that people are getting attracted to a credit card is their ease of use. When you want to make urgent purchases like if you have any special occasion, or for any emergencies,  you can just use your credit card and make the payment. Bank will make the payment on your behalf and you can pay the bank in a slow process like EMI.


Another important advantage why people are getting attracted is its safety. If you save your money on your debit card, it may be stolen by fraudsters and hackers. But if you have a credit card, money will be deducted after a month so you can block the transaction while the bank does the investigation.

Offers and Incentives

From most banks, credit card has more offers and incentives, so people will get attracted to credit cards easily. These offers and incentives will include cashback and reward points after every swipe of the card. For example, if you use a credit card for your groceries, a credit card gives you some cashback of Rs.100/- like that.

Low-Cost Loans

If you are sure that you will get money within a few days but you need to buy an item today itself then at that time a credit card will be very useful. You do not need to take any loan from outside with interest. You can just use your credit card, buy and when you get money just pay it in credit cards within the time limit. So that you do not need to pay extra interest.

Build Financial Health

One more advantage of buying a credit card is you can build financial health by repaying bills on time. If you use the credit card in a proper way that helps you to build and maintain a line of credit. It is very important for banks to view your credit card history based on your card repayments and card usage.

Read More: Difference between Credit Card & Debit Card

Disadvantages Of Credit Cards

As there are innumerable benefits of credit cards, there is also another side of the coin if you don’t use the credit card in a proper way which is a disadvantage of credit cards.

Over Usage 

Credit cards are known for offering a credit of huge amounts. Taking it as an advantage, there is a chance of making unnecessary purchases up to the limit and it may become a habit that leads to heavy debt that cannot be repaid in time. As credit card interest rates are usually high, along with debt it adds huge interest which will become a burden to repay.

So be cautious while purchasing and be aware of overspending.

Fraudulent Usage of Credit Cards

With the advent of technology, cyber crimes are increasing enormously nowadays. Fraud usage of credit cards has become one of them. Using the credentials of your credit card, the amount from your credit account will be stolen by various means. So be wise while using Your credit card at POS machines, online purchases, etc.

Unfortunately, if you lost your credit card, be quick to inform the same to your respective bank or to customer care so that the credit card will be blocked and not fraudulent transactions further.

Fall of Credit Score

Usually, all the transactions made by credit card and their repayments will be recorded by the bank, if the repayments were not done regularly i.e within the time limit, then the credit score tends to fall which leads to the rejection of loans if you want to take further.

So use the credit card wisely by repaying the credit amount regularly to maintain a good credit score.

Hidden Costs

One more disadvantage that comes first on the list will be hidden credit card costs that will dent your pocket without knowing. Hidden costs is nothing but the numerous additional charges that are associated while you get your credit cards like annual credit card fees, charges on foreign transactions, charges on cash withdrawals, and many more.

High-Interest Rate

When you take credit cards from the bank you should be ready to pay high-interest rates that will be charged by the banks if you don’t pay the bill on time. It can be higher than personal loans and can go up to 50% per annum. So, try to pay your credit card bills on time.

After seeing all these advantages and disadvantages of credit cards, if you are interested to take a credit card, apply for it and generate a pin by looking into this link how to generate a credit card pin clearly.

Safety Precautions To Follow While Using Credit Cards

As you have seen the advantages and disadvantages of credit cards, you may get some idea on how to use your credit card in a proper way, still, we are providing you with some more tips to follow to use your credit card in a proper way.

  • Spend the money on a credit card, the amount you can pay back before the due date.
  • Don’t use your credit card for your everyday expenses, so that you can able to track the money that you spend on the credit card.
  • Use your credit card only if it is an emergency. Otherwise, you may fall into credit card debt.
  • Select an EMI option while making large purchases with credit cards that will help you avoid paying interest on the balance.
  • Avoid interest charges by paying the complete due amount every month.
  • Always keep 40% of your credit limit aside for emergencies.
  • Control your spending when you see that 40% of your credit limit has been used.

Other Posts: Axis Bank Credit Card Pin Generation

FAQs on Advantages & Disadvantages of Credit Cards

1. Is it good to use a credit card?

Yes, it is good to use a credit card if it is used properly. Many people will end up in debt without using it in a proper way. So look into the article, if you want to know about using credit cards properly.

2. Can I able to withdraw cash from my credit card at an ATM?

Yes, you can withdraw cash from your credit card at the ATM like you withdraw cash from your debit card. However, make sure with your bank that you have this facility or not.

3. Does the bank offers any insurance on credit cards?

Yes, many banks offer insurance on their credit cards for card purchases in case you lost your credit card or if it is damaged, or if it is stolen by others.

4. Name 3 advantages of using a credit card?

By using credit cards we have many advantages, in that some of which are provided below.

  • Easy Loan Approval
  • Enhanced Financial Health
  • Affordable EMIs

Key Takeaways

Through this, you may get to know about the advantages and disadvantages of credit cards. If you are smart in using credit cards, it can help you financially, and if you are not well organized in using credit cards it will make you more harm than good. So use it wisely and enjoy!! If you have any doubts you can comment below.

If you are interested to know more useful information about credit cards, debit cards, and pin generation articles like Yes bank credit card pin generation , and many more follow our website.


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