Having credit cards in the 21st century is a necessity if you hope to build a solid credit history with the credit agencies. Many people assume, because you have credit cards, you will have credit card debt and pay interest on debt unnecessarily. Let’s look at a few reasons why credit cards can be good and bad.
Pros of having credit cards
- Convenience – Super easy way to make purchases without having to carry around cash
- Rewards – The ability to earn cash back, travel miles, and other reward perks
- Credit history – Helps establish credit history and increase credit worthiness
- Emergencies – It’s nice to be able to pay for things in a pinch if you don’t happen to have the cash pay for a surprise expense or need a cash advance.
Cons of having credit cards
- Interest – Carried balances incur finance charges
- Convenience – Some people can’t resist the urge to purchase things they can’t actually afford and
- Fees – Late fees can be brutal if you forget to make a payment and could result in higher interest rates as well.
- Credit history – Over utilization of your credit cards by building up large balances can hurt your credit profile and result in a lower credit score with major credit agencies.
In the end, having credit cards can be very beneficial and convenient if used correctly. Traveling for free using airline miles and receiving cash back checks can be very rewarding, but if misused, credit cards can inflict some financial pain and stress. Credit cards are not going anywhere soon and will continue to be necessary in for years to come.