Pros-and-Cons-of-Owning-a-Credit Card

Credit is an essential part of modern life, it is integral to almost all our purchases, but is owning a credit card all it is cut out to be?

Many modern consumers own multiple credit cards, with various providers and banks inviting consumers to use their credit cards as their preferred method of purchasing goods. There are also several banks giving generous incentives to consumers, such as 0% interest on transfers and purchases for a lengthy period of time, as well as reward points one can spend on anything from flight tickers to gift certificates.

With the aforementioned said and done, is it really all that great to own a credit card, or have we been blinded by the rosy cloud of capitalism and are oblivious to the fact that credit cards can in fact be catastrophic for an individual’s financial future. Are we better off without them?

Pros of Owning a Credit Card


Surely we have all experienced the lengthy wait at the gas station, when we are already late for work and the person in front of us is frantically looking in their bag, or their back pocket, for change, only to slowly begin to count it, as soon as they have retrieved the amount they were looking for, for what seemed to be an entire century in an your dimension of existence.

Well, credit cards are a saving grace with regards to, and not limited to, the aforementioned situation. Since contactless payment systems were introduced since late 2015, the way we complete our transactions has completely revolutionized the time we spend remembering our pin in order to complete small everyday transactions, like filing up with gas, or purchasing a sandwich. Speed is definitely a significant pro for credit card users worldwide.

Variety of Purchasing Options

Have you ever lied on your couch, browsing through websites full of goodies you would love to purchase? Well, with a credit card this is easier than ever, and individuals don’t even have to get up from the couch. Every purchase is literally two clicks and a few character inputs away.

Moreover, the variety of purchasing options is not limited to online purchases, as we can use our credit cards to pay for bills and goods over the phone. The variety of products we can purchase is limitless and staggering. As mentioned above, there really are very few reasons to even leave the house anymore.

Pay in Installments

Big purchases usually have a major impact on our household budget. A big purchase leaves a huge dent in our finances and it can leave us struggling for months before our bank accounts can recover.

By using a credit card, one can easily purchase more expensive items, and pay in installments, rather than watch their bank account balance suffer for months. That way the impact on a household’s finances is not as severe, as it would have been had the full amount been deducted from their monthly income.

Credit Score Improvement

One of the major surprise a first-time credit seeker will face is the refusal to give credit to those who do not owe anything to anyone. Yes, that's right, it is virtually impossible to get credit, if an individual has never had credit before. But there is actually a reason behind this madness.

In order for a lender to assess an individual’s eligibility for credit, they need to first have a look at their credit score in order to establish their borrowing habits and how likely they are to pay them back. Establishing a credit history will show lenders that individuals are to be trusted and that they are basically a safe bet.

For instance, someone who pays their credit card balance in full every month, instead of only paying the minimum payment required, is much more likely to have a high credit score, than someone who only pays the bare minimum.

Perks & Benefits

This is very simple to explain. Basically, the more we use our credits card, the more rewards our bank gives us. These bonus points, can be translated into air-miles, gift certificates and statement credits.

This is a great incentive banks give to individuals who use their card often. Basically, one can do all their spending on their credit card, when they have available funds pay the balance in full, and earn reward points in exchange. A win-win overall.

0% Interest on Purchases

Many credit card providers have introductory offers mainly for new customers. These offers usually include 0% on any purchase made in a six month period from the opening of their credit card account.

This option provides individuals with some breathing space, and enables them to pay off balances before interest is added to the amount they owe.

Emergency Fund

That sinking feeling when your car breaks down and you know you are most certainly going to be landed with a massive bill. The dreaded emergency bill is enough to send a household’s finances into a severely adverse territory.

Depending on the type of emergency, the bill can be catastrophic for finances, even to those households that manage to mostly stay in the black. Owning a credit card alleviates the stress in that type of emergency, as the option to pay the balance in installments, or in some cases even interest-free, is very convenient.

Insurance on Purchases

This is a benefit many credit card holders are not familiar with. If a purchase is found to be fraudulent, after reporting it, individuals still have access to their main source of funding, until the bank investigates the fraud.

The bank will usually replace what was effectively stolen from one’s account, until they are able to recover the funds through legal routes. The impact on the customer is thus minimal.

No Cash Needed

Just think what impact having $500 stolen from your wallet would have on your finances, and compare it with your credit card being stolen. Since the introduction of Chip & Pin, nobody can effectively use anyone else’s card without a valid pin.

Provided that individuals realize their card was stolen early enough, their bank will freeze their funds and replace their credit card before a thief has even exited the building.

It is also very convenient not to have to look for cash for small purchases, when one can just use their credit card quickly and safely.

Cons of Owning a Credit Card

Exceeding Buying Power

It is very easy to overspend on a credit card. Virtual money don’t seem to be real money at all. After all, they are made up from digits on a white screen when we check our balance on the computer, however, the debt one could accumulate is very real and it can be particularly damaging.

This is were credit cards can adversely impact individuals’ lives. Several studies have shown that individuals are more likely to indulge themselves in unnecessary spending if they pay with a credit card, rather than when they are using cash.

Easier to Get into Debt

Just imagine this. An individual’s monthly wage of $2,500 has just reached their bank account, but their available balance is $500 because they have spent $2,000 on a credit card, thinking it is not real debt.

Every time we use our credit cards, we are either reducing our monthly income, our savings, or we are simply spending money we do not actually have, which can very easily land individuals in serious financial trouble.

Misuse can Adversely Impact on Credit Score

The more individuals owe on their credit accounts, the more severe the hit to their credit score. This is why most people will see their credit score plummet, with every new credit application they complete.

Lenders like to see individuals use their credit and that they are sensibly keeping up with their payments, but if the amount of credit they currently use gets out of control, then lenders will be apprehensive to lend them anymore money until they have reduced the balance, or cleared, their credit accounts.

Credit Card Fraud

Even though banks have really good fraud prevention measures, and very favorable ways to deal with fraud for their customers, the mere fact of having a credit card in the first place makes individuals potential victims of fraud.

Saying that, the sooner the fraud is spotted and reported, the fastest the situation will stop affecting individuals and their finances.

High Interest Fees and Charges

If individuals keep up with their payments and clear a good chunk off their credit card bill every month, they generally have nothing to worry about, however, if they are unable to make timely payments, or if they are only paying the minimum monthly charge on their credit account, alarm bells start ringing.

This is where banks can become the enemy, so to speak, after all they need to make money somehow. Credit card interest can mount up quickly and individuals can find themselves in serious financial danger, with mounting interest charges and late payment fees.

An interesting fact is that most people facing financial difficulty with paying their credit card bill on time, can sometimes pay more than their current credit balance in fees, without ever seeing the initial amount borrowed reducing.


Credit cards can bring havoc to individuals’ finances if they are misused. Individuals who use their credit, keeping in mind that what they are spending is real money they will have to pay back, are less likely to get carried away and land themselves in financial trouble.

In conclusion, credit cards are very useful, but in the wrong hands, they can literally destroy an individual’s financial future and make it extremely difficult for them to ever recover without filing for bankruptcy.

So, “Credit Cards: Friend or Foe”? The answer is: It depends.