Good Tool - But dangerous (Credit Cards in general)

Member Name: jpegington

Product:	Credit Cards in general
Date:	23/12/06 (143 review reads)
Rating:

Advantages: Useful for interest payments or short term loan

Disadvantages: Can get into Debt, High Interest Charges

Credit Cards - A necessary evil or just plain evil?

I must admit that I have never been a big fan of credit cards, mainly because I just hate the idea of DEBT. However I got my first credit card when I was 23 (managed to do without them as a student for which I was grateful) and only really got the credit card for one reason. This reason was that I was beginning to travel with my company on sales trips and wanted to make certain that if I had a problem abroad, I had the financial means to get home and / or sort out whatever problems I have.

Since then I have had a number of credit cards, mainly with work being given a business credit card so feel that I am in a reasonable good position to make an opinion on credit cards.

In my opinion credit cards have a necessary evil associated with them. They are great to have as a backup should you be travelling or should you have an emergency, however there are issues associated with them that makes them not such a good tool. I would say that a credit card can be a very useful tool to have as part of your emergency funds, should you have any problems, but should always be repaid in full in order to stop interest payments.

Credit cards are also useful means of getting quick advances of cash. Should you be a little short one month, then you could do your shopping on the credit card for one week in order to free up some cash for other important issues. This is useful and convenient, but leads me nicely into my next point,

Credit cards are very dangerous to have and to use. Should you take my example above of getting the shopping for one week on the credit card, then that is great, but you have to remember that you have to pay that same sum back again at some point. Therefore credit cards are often the first step into DEBT and money problems. Many people put purchases onto the credit card in order to pay for it later, which is fine should you take this into account and budget for it. However should you not do so, then this can easily start a slide into debt, where you cannot afford to repay the credit card and need a loan to clear it, etc etc etc.

Obviously credit cards are great as a short-term finance opportunity (especially if you get a good 9 month interest free card and clear it at the end of the interest free period) but often credit cards are very high on interest and are a very expensive way of borrowing money. Therefore they should only be used as a last opportunity as a long-term loan as you will just pay back far to much interest.

Another point to mention with credit cards is Internet shopping. I mention this because it is a great tool to use when you purchase anything over the internet, because if I am not wrong, you have an added layer of protection, in that should you have a problem with said purchase, then you go to the credit card company to sort out issues of fraud or non delivery of goods, etc. This is a useful tool in favour of credit cards.

All in all I would say that Credit cards are useful as a tool as part of sensible money management, but the key is to know how much money you spend on them, and always pay them off in full to ensure that you are not paying high interest payments and getting into Debt.

Summary: Good tool but is often the first stage of Debt