disadvantages of credit cards

What are the Disadvantages of Credit Cards to Know?

Although it has many advantages, of course there are still disadvantages of credit cards that you need to know. This is so that you are more careful when using a credit card.

Credit cards are a very helpful tool when you need emergency funds. However, credit cards can also lead to stressful financial situations. For example, you use credit cards excessively, making your financial condition more difficult.

Therefore, before you decide to use a credit card, you must be able to manage your financial cashflow or financial management properly. If not, then credit cards will slowly make your life difficult.

So, that you are not in a hurry to decide whether you want to use a credit card or not,The following are some of the disadvantages of credit cards that you need to know:

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1. Interest Payment

Credit card interest is the fee for borrowing money from your credit card issuing bank. If you use a credit card, you have to pay your loan back along with the interest. How much interest you will pay depends on the type of card you have, the transactions you make, and when you make the payment.

2. Other Cost

Point 2 about disadvantages of credit cards. Credit cards also charge various other fees. In general, there are several credit card fees such as annual fees, cash withdrawal fees, over limit fees, and others. So, credit cards do not necessarily offer various benefits. You must carefully look at the burden of fees that you bear in using the credit card.

In addition, credit cards can also impose late penalties, if you are late in making the minimum payment on your credit card. If you are subject to late fees, pay the amount due immediately and contact your bank to see if you can negotiate a fee waiver.

3. The Temptation of Spending Money

Having a credit card feels like having a lot of money to spend on whatever you want. This is what makes most credit card holders tempted to spend money. Fun is only at the beginning, while later you still have to pay credit card bills.

Overspending is one of the causes of credit card debt piling up. To avoid this, you should look at what you can afford to pay so you know how much you can afford to spend. Don’t use a credit card to buy something you know you can’t afford.

4. Credit Score Decrease

If you dare to have a credit card, you must also dare to be responsible when using it. In addition to paying your bills on time, you should also pay attention to how credit cards can affect your credit score. Because this credit score affects the bank if in the future you apply for a loan. The worse your credit score, the more difficult it will be to apply for a loan from the bank.

Everything you do with a credit card can affect your credit score. Your credit score is calculated using the information on your credit report (your credit record and loan account).

How to avoid a credit score drop? Make sure you pay at least the minimum balance due on time. Pay off your credit card balance to keep your overall credit usage low. Don’t close old credit cards or apply for too many new credit cards.

This is information about disadvantages of credit cards. To avoid the shortage of credit cards, make sure you use credit cards wisely. See you in the article about banking on the investmoneysaving.com website. If this article is useful, don’t forget to share it on your social media.



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