Pros and Cons of Credit Cards

The biggest advantage of using credit cards is that they can satisfy users’ consumption needs in advance. For example, when personal funds are insufficient, users can purchase the things they like by swiping their credit cards. Moreover, using a credit card in daily life eliminates the need to borrow money from others, so you can owe less favors.

It is relatively safe to use a credit card to make purchases. Using a credit card can avoid carrying a large amount of cash. After all, it is difficult to find cash after it is lost. Another benefit of using a credit card is to save money. The various benefits included in the credit card allow users to spend less money when making purchases.

In the process of using credit cards, you can accumulate personal credit by paying back on time. As long as your personal credit record is good, it will be easy to apply for various loans. Using a credit card also makes it easier for cardholders to manage their finances. They can know their consumption and expenditures in detail through their credit card statements.

The biggest drawback of using credit cards is over-consumption. After over-consumption, many people find it difficult to repay on time. In addition to incurring penalty interest, late repayment will also affect personal credit. Many people have also become card slaves. Moreover, in the process of using credit cards, it may also cause fraud, causing unnecessary losses to individuals.

What are the pros and cons of credit cards?

Pros: Overdraft is possible; risk coefficient is reduced; various discounts are constant, saving money; investment and financial management are convenient; free shopping; personal credit accumulation; easy loans Payment upon arrival; flexible installments for easy turnover.

Disadvantages: It can solve the temporary economic crisis, but once the interest-free repayment time is exceeded, high interest will be charged.

Types of credit card risks:

1. Risks from cardholders: First, cardholders maliciously overdraft. The second is that the cardholder falsely claimed that he had not received the goods. The third is to report the loss first, and then use the loss report card extensively in a very short period of time. The fourth is to use the credit card overdraft amount to issue.

2. Risks from merchants: First, fraud by unscrupulous employees. In reality, employees have access to a customer's card information and may even hold the card out of the customer's sight. Unscrupulous employees will use customers' credit cards to make purchases and withhold invoices arising from illegal use, causing customers to suffer losses.

The second is fraud by unscrupulous merchants. Unscrupulous merchants use domain names or emails similar to those of well-known stores to guide consumers to log in to their own websites. It is difficult for consumers to identify the authenticity of Internet merchants, and it is easy for consumers to easily submit payment information. The owner of the special store forged the customer's purchase invoice, and then used the fake invoice to request payment from the bank.

3. Risks from third parties: First. The cardholder will make large and rapid transactions until the legitimate cardholder reports the loss and the card is frozen by the bank. The second is. In places such as hotels and restaurants, the authorization link is usually out of sight of the cardholder, which gives unscrupulous staff the opportunity to use small card reading devices to obtain magnetic stripe information. The third is ATM fraud.

Fraud that occurs on ATM equipment is usually due to passwords being stolen or forged, or even violent robbery. The fourth is forgery. Criminals first obtain the customer's credit card information, such as by stealing it, or illegally installing a receiving device in a keyboard input device, or computer hackers obtain it by attacking the online banking system, and then forge the credit card. The fifth is identity fraud. This includes both consumer identity theft and merchant identity theft.

Sixth is false declaration. Criminals use false identity certificates and credit information to apply for credit cards, or falsely report that the card is lost, and then conduct fraudulent purchases or cash withdrawals, causing the bank to suffer losses.

4. Risks from commercial banks: There are illegal staff within commercial banks, and they often take advantage of their authority to commit crimes internally. Such as creating a credit card or a pre-made credit card without authorization, pretending to be a customer to withdraw cash or using the card to make purchases; or exceeding the authority without authorization and withdrawing large amounts of cash; or stealing cash by changing computer customer information and deposit balances.

The advantages and disadvantages of applying for a credit card

The advantages and disadvantages of applying for a credit card are:

Advantages of a credit card: Compared with ordinary bank savings cards, credit cards are the most The convenient way to use it is that you can make ordinary purchases without cash in the card. In many cases, you only need to return the consumed amount on schedule. You can make overdraft purchases without depositing. It is not only safe and convenient to swipe your card when shopping, but you can also get points as gifts. You can enjoy discounts when you use your card at the bank's designated merchants.

Disadvantages of credit cards: The invention of credit cards is like a double-edged sword, which can solve the temporary economic crisis. However, the purpose of banks issuing credit cards is to make money. Once the interest-free repayment time is exceeded, high fees will be charged. The interest on the amount is generally 0.05% per day. Developing the habit of blind consumption leads to blind consumption and spending money like water.

If you cannot repay on time, the bank will charge high interest. Long-term malicious arrears will naturally affect your personal credit record and even be blacklisted by the bank.

That’s it for Zhihu’s introduction to the pros and cons of credit cards.