Having a credit card is not a necessity. Having a credit card only helps you do your transactions more efficiently and conveniently. A credit card is something you can do without.

Here are a few things that can help you see the advantages and disadvantages of having a credit card to re-evaluate if you really need that second one being offered to you.

Advantages:

  1. Efficiency and Convenience

As mentioned earlier, credit cards help us do our transactions with ease. It helps execute transactions with efficiency and convenience. Having a credit card allows you to save time visiting a payment facility when you can do your payment transactions online. It also helps you purchase things you can have delivered right in front of your doorstep rather than going to the store. Lastly, it allows you to make purchases when cash is not readily available.

  1. Payment consolidation

For record keeping purposes, using your credit card for all your expenses and purchases allows you to keep track of all your outflows in one statement. Credit card statements keep track of all the expenses that can help you in keeping account of all the transactions you’ve entered into within a specific period.

  1. Build Positive Credit Score

Of course, this is the easiest way to keep building a positive credit score. If you consolidate all your monthly payments and charge it to your credit card under auto pay, and you are able to pay the obligations you have with your credit card, this helps you build a positive credit score

Disadvantages:

  1. Overspending

Having the ability to spend beyond your actual capacity can often lead to debt. You need to ensure that all the charges you make with your credit card is covered by your cash reserves.

  1. High Interest Rates

Allowing your credit to revolve are charged with high rates of interests. It is quite important be aware of the charges at hand to help you avoid incurring them. Any unpaid amount allows the bank or financial institution to charge you with finance charges.

Identifying the advantages and disadvantages of a credit card allows you to have an informed decision when applying for one.