ADVANTAGE AND DISADVANTAGE OF CREDITS CARDS
Convenience--Credit cards can save you time and trouble--no searching for an ATM or keeping cash on-hand.
| Overuse--Revolving credit makes it easy to spend beyond your means.
| Record keeping--Credit card statements can help you track your expenses. Some cards even provide year-end summaries that really help out at tax time.
| Paperwork--You'll need to save your receipts and check them against your statement each month. This is a good way to ensure that you haven't been overcharged.
| Low-cost loans--You can use revolving credit to save today (e.g., at a one-day sale), when available cash is a week away.
| High-cost fees--Your purchase will suddenly become much more expensive if you carry a balance or miss a payment.
| Instant cash--Cash advances are quick and convenient, putting cash in your hand when you need it.
| Unexpected fees--Typically, you'll pay between 2 and 4 percent just to get the cash advance; also cash advances usually carry high interest rates.
| Perks--From frequent flier miles to discounts on automobiles, there is a program out there for everyone. Many credit card companies offer incentive programs based on the amount of purchases you make.
| No free lunch--The high interest rates and annual fees associated with credit cards often outweigh the benefits received. Savings offered by credit cards can often be obtained elsewhere.
| Build positive credit--Controlled use of a credit card can help you establish credit for the first time or rebuild credit if you've had problems in the past--as long as you stay within your means and pay your bills on time.
| Deepening your debt--Consumers are using credit more than ever before. If you charge freely, you may quickly find yourself in over your head--as your balance increases, so do your monthly minimum payments.
| Purchase protection--Most credit card companies will handle disputes for you. If a merchant won't take back a defective product, check with your credit card company.
| Homework--It's up to you to make sure you receive proper credit for incorrect or fraudulent charges.
| Balance surfing--Many credit card companies offer low introductory interest rates. These offers allow you to move balances to lower-rate cards.
| Teaser rates--Low introductory rates may be an attractive option, but they last only for a limited time. When the teaser rate expires, the interest rate charged on your balance can jump dramatically.
* Purchase Power and Ease of Purchase - Credit cards can make it easier to buy things. If you don't like to carry large amounts of cash with you or if a company doesn't accept cash purchases (for example most airlines, hotels, and car rental agencies), putting purchases on a credit card can make buying things easier. * Protection of Purchases - Credit cards may also offer you additional protection if something you have bought is lost, damaged, or stolen. Both your credit card statement (and the credit card company) can vouch for the fact that you have made a purchase if the original receipt is lost or stolen. In addition, some credit card companies offer insurance on large purchases. * Building a Credit Line - Having a good credit history is often important, not only when applying for credit cards, but also when applying for things such as loans, rental applications, or even some jobs. Having a credit card and using it wisely (making payments on time and in full each month) will help you build a good credit history. * Emergencies - Credit cards can also be useful in times of emergency. While you should avoid spending outside your budget (or money you don't have!), sometimes emergencies (such as your car breaking down or flood or fire) may lead to a large purchase (like the need for a rental car or a motel room for several nights.) * Credit Card Benefits - In addition to the benefits listed above, some credit cards offer additional...
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