Advantages and Disadvantages of Credit cards

Credit Card is an Automatic advanced card, when you used it, you can get the goods you bought without paying for it yet.Credit cards are a widely used source of convenient credit for restaurants, hotels, mail order, on-line shopping, gasoline stations, grocery stores, dental and medical care, church bazaars, as well as telephone and television advertised products. There are many advantages and disadvantages of using credit cards, but the consequences of misuse can be drastic and painful.

Advantages
.Credit cards eliminate the need to carry large sums of cash
.If you are away from home without cash, you often can receive a cash advance or have the option of buying traveler’s checks with acredit card.
.Places that are suspicious of personal checks often take credit cards.
.Credit cards act as a short-term loan if you find something that is a bargain and haven’t the cash or balance in your checking account to pay for it.
.If you move to a new place, credit cards give you purchasing power until you establish yourself as a good risk in a new community.
.If you charge an item or service that costs $50 or more in Colorado (or within 100 miles of your home) and later discover it doesn’t work or has other problems, you can withhold payment from the credit card company if you have attempted to resolve the problem with the merchant.
.You often get the best rates of exchange when traveling in foreign countries if you use your credit card for purchases and your ATM card to get cash. Check with your card issuers about surcharges before you leave on your trip. A two to three percent surcharge may eliminate this advantage.
.Credit cards can help coordinate receipts for tax purposes.
.Bookkeeping is reduced to one monthly bill as opposed to checks.

Disadvantages
.Some people have been swindled by giving their credit card numbers to dishonest salespeople over the phone.

.It becomes a loan when the credit becomes due and you do not pay for it.
.Adding monthly interest charges means you pay more for the goods and services.
.Consumers often have more than one credit card and each one has a credit limit. When the credit limits for all cards are added up, thetotal can be in the thousands of dollars. Consumers can fall into thehabit of using credit cards to extend their income.
.Credit cards are easier to use than applying for loans even when a loan from a credit union, bank or other financial institution may provide the funds at a lower interest rate.

4 Types of Credit Cards

There are four major types of credit cards: travel and entertainment cards (T & E cards), bank cards, retail store cards, and oil company cards. Applications and interest rates for each type of card may be different. When using a credit card, the consumer agrees to the terms of the credit card company. Read these terms carefully and understand them before using the card.

1.Travel and entertainment cards (T & E) - Consumers must apply for travel and entertainment cards such as American Express, Diners Club, and Carte Blanche and are charged an annual membership fee. Card holders are billed for purchases every 30 to 60 days. They are expected to pay each bill in full. Failure to pay promptly may result in a poor credit report, interest charges, and eventual cancellation of the account.
Some T & E cards offer card holders additional services such as group life and accident-and-health insurance, cash advances and gift catalogues. Free travel insurance is frequently provided when T & E cards are used and they may offer to stretch payments for large bills over a three- to six-month period.

2.Bank cards - The two major bank cards are MasterCard and VISA. Some cards are offered without fees, some are included in a total banking package, and others charge a yearly membership fee.You may use bank cards to charge motel and restaurant bills, merchandise, airline tickets, services, and some cards allow cash advances. Interest on a cash advance starts the day you get the money and continues until you pay back this loan.You are granted a bank card based on your credit record. Your credit record also determines the maximum amount you can charge. You may request to have this limit raised if you establish a good credit history while using the bank card.The interest charges for bank cards range widely, so it’s worth shopping for a low interest rate if you don’t pay your bill in full each month. If you fail to make the monthly required minimum payment, this is reported and shows up on your credit report. You can have your account cancelled.

3.Retail store cards - Retail credit cards are issued by department stores and other companies. If you have a retail store card, you may be notified of special sales before the general public. These cards offer revolving credit at a pre-established credit limit. Finance charges are added to your bill if you do not pay in full each month. Most retail stores also accept bank cards.

4.Oil company cards - Oil companies offer their own credit cards and most accept VISA and MasterCard.

Web Sites To Check for Credit CardsHere are some Web sites to compare credit card fees and interest rates. (Remember that web sites that end in .com are commercial sites and will usually have something to sell.)

www.consumer-action.org

www.icreditsearch.com

www.lendingtree.com

www.cardweb.com