A credit card is a financial tool. Like any tool, it can provide advantages when used well, and disadvantages when used improperly.
- lets you borrow money instantly to make purchases
- allows you to carry less cash
- lets you get cash advances
- lists purchases in one monthly statement
- helps you establish a credit history and earn a good credit score
- provides a free form of credit if you pay the balance in full and on time
- provides a convenient payment method for purchases made on the Internet and over the telephone
- has limited liability in case of fraudulent use
- may offer extended warranty and purchase protection benefits on most credit card purchases, as well as other rewards and benefits.
- allows you to build up more debt than you can handle
- damages your credit score if your payments are regularly late or you don’t repay
- costs much more than some other forms of credit, such as a line of credit or a personal loan, when interest charges are incurred.