The Pros and Cons of Having a Credit Card

I am a full time student and recently I applied for a student credit card with a limit between $300-$500. This is not a lot but it will be very releasing for me to use my card online and begin to build up my business and be released to do that. I am very disciplined so I know that I will not get into excessive amounts of debt. I will be using my credit card to move my financial situation forward.

Seeing as I am applying for a credit card I thought I would share with you guys what I believe to be the pros and cons of having a credit card. You should weigh up the pros and cons for your situation before you ever decide to get a credit card for yourself.

Pros:

  • You can buy whatever you need to now and pay for it later
  • You can receive rewards for using it such as frequent flyer points
  • You can use it to make purchases online
  • Many hotels require a credit card to be able to check in
  • It allows you the freedom to do whatever you want
  • Many companies and stores accept credit card as the easiest form of payment
  • You can use the money you don’t have as a way of investing into your business (as long as your return is greater than the debt you pay).

Cons:

  • You can get into some nasty debt if you are not careful
  • If people find your credit card or details then they can easily use it to make purchases
  • You can live beyond your means spending more than you can afford
  • You have to pay sometimes over 20% in interest on your payments
  • Sometimes if you are not aware of the fees you can be charged fees for reasons you weren’t aware of

So I weighed up the pros and cons of getting a credit card and decided that I needed wanted a credit card because it would be useful to move my business forward and it would release me now to buy some things that I need which I can pay off when I start working full time.

Note: Personal Finance tip 101 is to never get a credit card if you can avoid it. But if it is seriously going to make your finances better through investing in appreciating assets then a credit card can be a great tool. But be careful you don’t get into too much debt or get stung by fees. The convenience of credit cards makes it extremely difficult to avoid accruing tons of debt. The general rule of thumb is: If you always ran out of money before your next paycheck, you probably shouldn’t be getting a card. On other other hand, if you saved your money and had some left before you got paid again, you probably can handle the freedom that comes with having credit.