Credit Card Usage, Interest, And Disadvantages (Credit Cards Carry Interest)

Often many people tend to focus on the Minimum Payment Due amount displayed on the bank statements, and feel relieved on paying this minimum amount. However, you must realize that this minimum amount is at the most only 5% of the total outstanding balance. If you pay only this much you will enter into a cycle of revolving credit, which just might be never ending. By mentioning this amount, banks can lull into a revolving credit cycle, which you must avoid. Hence, it is advisable to consider the total amount due, and it would be ideal if you could pay off the full amount, as then you would save yourself interest charges.

Rewards Cards
There are numerous types of reward cards that are available today. One such reward cards that is become extremely popular today are the airline cards, wherein you get air miles on each dollar spent, which can then be redeemed for air tickets. However, it is often asked if such a reward is worth it. For example, it costs thousands of air miles for a short flight, hence, it may take years to collect enough air miles for a flight. On the other hand, a cash back reward might be better as you could earn enough cash to buy a plane ticket in a much shorter time. Hence, though the airline reward might seem enticing, you must take into consideration the regularity of your travels.

Benefits of Credit Cards
Cards provide numerous benefits for its users. However, there are people who are still hesitant about using such a service. Yes, there are some cons, but the pros of such cards surely outweigh the cons. The basic advantage is that is gives you free credit, hence, you can purchase something and pay for it only later. It is also a safe and easy way to purchase things over the Internet, over the phone etc. You also have the benefit of fraud protection, i.e. if you are a victim of fraud you will not have to pay for it. In addition, global acceptance makes it easy for you to use your card even while traveling.

Understanding Charges
Cards surely have overwhelming advantages than disadvantages; however, it is necessary that a consumer be aware of the potential disadvantages to avoid being rudely shocked later on. First, though you receive free credit, if you do not repay the balance every month, you will need to pay the stated interest charges as well. In addition, all cards have a credit limit, which could be less than what you hoped for. In addition, often there are a number of fees and charges levied which can be quite a pain. Apart from the interest charges, there are at times annual fees, late payment charges etc.

In recent times, it has been found that the consumers comfort level of shopping online has surely grown, and is expected to rise over the next few years as well. However, according to some studies it has been found that while e-commerce is continuing to grow, customers are using other alternatives to make payments such as debit cards; and hence, the use of credit cards is on the decline. The potential reason behind this being that consumers are growing more averse to carrying a large amount of credit card balance, as it could lead to debt issues in the future.

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