Risks and Benefits of Obtaining a Credit Card
A Credit Article Contributed by Elizabeth Bryant
Why Should Someone Want to Get a Credit Card?
There can be many benefits to having a credit card. Paying for your purchases using a credit card can be safer than carrying cash. Credit cards also eliminate the need for personal contact during purchases, as with on-line shopping. This is a convenient option if you have a hard time getting out to the locations where you want to shop.
Once you begin to build your credit by making purchases and then paying the card off regularly, your credit limit will increase. You can then make larger purchases such as cars or trips. Companies prefer purchases made on credit versus those done with cash or check because the money is guaranteed to be available.
What are the Risks Involved in Obtaining a Credit Card?
The greatest risk for someone with a credit card is temptation. The card allows you to buy something when you don't have the cash on hand. It can be very easy to spend money you don't have. If you make purchases and can't make the monthly payments, you can find yourself in heavy debt. This can ruin your reputation with other creditors, and make it impossible to get loans. Bad credit is very difficult to fix and will follow you for many years.
People who use credit cards also take the risk of becoming victims of identity theft. This involves someone obtaining your credit information and using it to make unauthorized purchases. Disputing purchases on your account is a very complicated process. It can be difficult to prove that it was not you who made the purchases. Although most credit card companies will not hold you responsible for unauthorized purchases, some will. Even if you are not held responsible, your credit will remain unusable until the purchases are investigated.
How Can I Decide If I Am Ready to Apply for a Credit Card?
First, you have to decide if you have enough income available to make you eligible to apply. If so, your next question should be what type of credit card you want to apply for and what credit limit to ask for. It is best not to ask for a limit greater than your disposable income.
Lastly, the most important thing you need to ask yourself before you apply for credit is whether you have the discipline to maintain a good credit rating. Can you withstand the temptation to go crazy when you get your credit and buy everything you want? If you do make purchases, can you be sure that you will take the money that you do have available and make the payments required of you? If you can answer yes to these questions, then you can likely handle having a credit card. If not, it is probably best to avoid them.
It is very difficult for an adult in today's society to maintain the lifestyle they want without credit. However, it is just as easy to find yourself drowning in debt if you don't have the discipline required to handle credit responsible. Be honest with yourself when contemplating getting a credit card, and you will make the right decision.
