UK Credit Card

Advantages and Disadvantages of Credit Cards

Advantages
  • Less cost effective if borrowing for a short-term period – Personal loans can be expensive to borrow than if you borrowed the balance off a credit card. The interest is paid on the remaining debt only, not the whole loan.

  • More flexible – You can pay small amounts each month or can pay up to the total balance.
    There are no redemption penalties – If you paid off a loan earlier than contracted, you would come across a redemption penalty.

  • Interest free credit – Normally, up to 60 days interest free credit.

  • Telephone and Internet shopping – With this you can purchase items remotely.

  • Extras – With credit cards you have more benefits such as, insurance cover when buying an item, cash back, air miles and can save on holidays when booking online.

Disadvantages

  • Higher rates when withdrawing cash – If you withdraw money out the cash point, it can be much more cost effective.

  • Credit limit exceeded – You are only limited to a certain credit limit.

  • Can fall into a larger debt – Credit cards offer a feature, which can make people, spend more than what they can actually afford.

  • Easier to be a victim of fraud – When using your credit card remotely, you have a higher chance to be a victim of fraud as card details may be taken and used by a third party.



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