The offer of credit cards by banking entities is vast and while on the one hand there are those who strongly embrace this financial option, there are those who abhor it. At the end of the day, who is right?
Incorrect and uncontrolled use of a credit card can lead to serious debt problems, as it allows you to make purchases with great ease. Still, when well managed and organized, the use of a credit card can prove to be an added value, for example, when buying a house.
Shall we better understand the advantages and disadvantages of this payment method?
Credit card disadvantages
As it's a card that “always” has money, a credit card can lead to impulse purchases and, consequently, serious debt. The false feeling of power that a credit card gives to some people ends up inducing them to make easy purchases and almost always ends up dictating a series of debts that are difficult to pay off.
Besides, the high interest rates associated with the amount of available credit means that the amount owed is exponentially higher than what was actually spent, especially when we talk about payments in installments.
You also need to be alert to the credit card fraud. This is because card cloning is a reality, especially when using it for online purchases.
Credit card advantages
Despite everything, the credit card also brings many advantages, as long as it's used with caution and security. The payment flexibility and the convenience of being able to use this card in emergency situations proves to be added value when making some purchases.
Also the fact that this payment method is accepted practically everywhere makes it a travel essential inside and outside our country.
Lastly, and what we consider to be the most important advantage, is the help they provide when approving or rejecting a mortgage loan application.
This is because when analyzing your situation, the bank will have to analyze your financial situation and the credit application may even be refused because you do not have a credit history. In these cases, the conscious and calculated use of a credit card can be the proof the bank needed that they're dealing with a person fulfilling their financial obligations.
In this case, and if you are thinking about taking out a Home Loan soon, perhaps it's a good time to acquire a credit card, maintaining good behavior, to start creating some positive history!