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June 2012
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Advantages of Credit Cards

What are the advantages of credit cards?

Broadly, the advantages of credit cards are:

  • Allow better control of family finances, reflecting movements in detail
  • Enable online shopping
  • Allow to defer payment and return after a month without extra cost     (except for revolving cards)
  • Some return a percentage of purchases (gasoline purchases at certain     stores, etc.).
  • Some include points programs
  • Some include insurance (such as Citibank Citi Gold)

There are some advantages to consider. However, we must also consider the risks involved with plastic money to buy.

After seeing the good side, we see the risks of owning credit cards:

  • Risk of over-indebtedness. It is the greatest danger of credit cards because, to afford to pay with money that is not yet available, there is the risk of uncontrolled spending and fall in the postponement of payments, which comes with interest of up to 28% TAE
  • If our revolving card is not able to pay the total debt each month, thus incurring interest necessarily
  • There is a risk of fraud, so it is advisable to be cautious of online shopping and also make sure that your card is insured against such scams

Tips for choosing and using credit responsibly card

Finally, we will give you some tips on how to choose and use a credit card:

First, consider whether you really need a credit card. It is a financing tool, and if you do not look capable of controlling spending might be better to use a debit card (see article “Credit card or debit”)

  • If you go for credit card, choose carefully to your needs. You can do it through a card comparator
  • Carefully read the fine print before choosing a credit card.
  • Look at the fee, not only for the first year, but for the rest. Sometimes it is only free for the first year
  • Know your card. You should know which committees have, what is the maximum permitted  indebtedness, what benefits to provide and what interest applies

Be responsible and do not get into debt beyond your means. Interest deferral and delay of the credit cards are the highest in the market.

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