Risks and Benefits with Credit Cards

Having a credit card is a boon as it has many advantages. It eliminates the risk of carrying cash and it also does away with the need to go to the vendor as on-line shopping with the help of the credit card provides a hassle free shopping experience within the confines of one's home. The credit card, thus, minimizes personal contact during purchases and does away with the need to go out of the house for shopping.

By making regular purchases through the credit card and paying off in time, one can improve one's creditworthiness and increase the credit limit. As the payment is guaranteed, the vendors prefer to make sales against credit cards. A credit card is a plastic card issued by the credit card company, and it allows you to make purchases without paying any money to an extent, which is predetermined. As soon as you pay back the amount you have spent or a part of it, the credit limit is automatically replenished.

A due date is normally stipulated for paying back at least a part of the amount spent by you and it is necessary to pay back by that date. In case of failure to do so, the company levies a finance charge or interest on the unpaid amount.

What are the risks in having and using a credit card?

Temptation to overspend and live beyond one's means is basic to human nature and it can be indulged very easily with the help of the credit card. Not being able to pay back in time can prove damaging for one's creditworthiness and make it difficult to obtain loans in the future. The risk of identity theft is always there as others may be able to get your credit card details and use them to make purchases on your behalf. It is an uphill task to prove that you had not made the purchase and even if the credit card company does not hold you responsible for such a purchase, you will not be able to use your credit until the investigations are over.

Who is eligible to apply for a credit card?

You must ensure that you have enough regular income to be able to apply for a credit card. You also have to decide the credit limit that you wish to establish. However, this should not be more than your disposable income. The type of credit card required by you will also have to be decided by you. You must also find out whether you will be able to withstand temptations and not buy to an extent, which you will not be able to pay back in time and thus lose your credibility. If you think that you cannot do so, it will be better not to go in for a credit card. You should be honest with yourself regarding your ability to ward off temptation and live within your means, before going in for a credit card. 

It is very difficult for an adult in today's society to maintain the lifestyle they want without credit. However, it is just as easy to find yourself drowning in debt if you don't have the discipline required to handle credit responsible. Be honest with yourself when contemplating getting a credit card, and you will make the right decision.