Today, while acquiring a credit card has become easier, many individuals face financial issues because they cannot pay back their debts. This writing would argue that the drawbacks of this trend are more significant than the benefits.
One drawback of credit cards is that it is easy to overspend. Depending on your credit card limit, a new credit may give you access to more funds than you have in the past. If you are irresponsible, you can make unnecessary purchases, which may lead to damage financial health. Another negative aspect is that the interest rate is typically much higher than with a traditional loan. When you use your credit card, you have to pay for not only the annual interest rate charged but also service fees, and penalties for late payments.
However, the disadvantages above pale in comparison with the advantages. Firstly, it is a great way to build credit. When people provide access to credit cards, their borrowing money history and paying it back are recorded. If they use credit cards frequently or pay their monthly installment on time, they will be assessed with higher credit scores, which can help them borrow higher credit limits. Another positive is that credit cards are more secure than cash. For example, if you lose your credit card, you can announce to the credit card company to place a hold on it to avoid fraudulent purchases whereas if you lose a little money, you cannot find it again.
In conclusion, the demerits of this trend certainly surpass its merits. Not only can people overspend easily but they also can pay for higher interest rates.