What are the advantages and disadvantages of credit cards? What are the advantages and disadvantages of credit cards?

Benefits of credit card

1. Advance overdraft function. When cardholders are short of money or have large capital flows, they can use the advance overdraft function of their credit cards to solve their funding needs. You can choose to swipe your card or withdraw a small amount of cash to meet your temporary needs;

2. Enjoy the convenience of installment payment. When you need to buy a large item (such as a laptop or a car) for life or work, and if the financial pressure is relatively high, you can choose to apply for a credit card installment payment and pay a small amount of interest to meet your consumption needs.

3. Enjoy discounts. Generally, various credit cards have their own exclusive discounts on food, clothing, housing and transportation, as well as special service rights.

Disadvantages of credit cards

1. Blind consumption. Addicts enjoy a pleasant card swiping process and even purchase unnecessary things, which greatly increases their financial troubles;

2. Various handling fees and interest. Many banks not only charge handling fees for credit card cash withdrawals, but also charge interest, which is not a small sum. They also charge annual credit card fees, which will undoubtedly increase the financial burden;

3. Cause credit problems. If you repay overdue, you will have a bad credit record, which will affect your personal credit score, bring great inconvenience to your life, and even add you to the bank's blacklist, making it difficult to move forward.

Generally speaking, the advantages and disadvantages of credit cards are relative. Just like some people celebrate birthdays with candles, while others set them on fire. The original intention of issuing credit cards was to facilitate people's lives. Only by using credit cards well can we enjoy its benefits and avoid its disadvantages. Related Q&A: Related Q&A: What are the advantages and disadvantages of credit cards? Can you analyze them?

First of all, credit card is a personal financial credit tool. Since it is a tool, and both producers and users must carry out activities within a legal framework, the advantages and disadvantages of credit cards vary from person to person. But generally speaking: the benefits are objective and easy to see, and the disadvantages can be avoided.

1. Credit card benefits

1) Overdraft in advance and enjoy the interest-free period. This is the essence of a credit card as a credit instrument. Overdraft in advance is the realization of personal credit, which is especially important today when the concept of advanced consumption is becoming increasingly popular. The interest-free period is a kind of personal financial configuration. Although the number of interest-free periods varies among banking institutions or credit card products, the longest interest-free period of 50-56 days is relatively mainstream. Generally speaking, during the interest-free period, you can use bank funds (interest-free loans) for free to fulfill your consumption needs.

2) Safe and convenient. The emergence of credit card and bank card swiping acceptance machines (POS machines) has gradually reduced the opportunities for cardholders to carry large amounts of cash, while merchants have reduced the probability of facing counterfeit banknotes or incorrect change when collecting cash. When transacting at the same time, swiping your card improves transaction efficiency. In recent years, with the emergence of Alipay, WeChat Pay, Cloud QuickPass and various aggregated payment QR codes, credit cards have gradually begun to evolve from physical cards to electronic accounts.

3) Installment payment. In addition to the normal interest-free period for consumption, credit cards also have the function of consumption installment and bill installment. Consumption installment is more practical. For large purchases or 3C products, various banking institutions will launch consumption installment products or services to alleviate the pressure of one-time repayment by cardholders. The bill installment means that if the consumption bill of the previous period cannot be repaid in one go in the current period, apply for bill installment from the bank. Whether it is consumption installment or bill installment, cardholders need to pay corresponding handling rates when using this service.

4) Temporary quota. Credit card limits are generally divided into fixed limits and temporary limits. The fixed limit is a limit given during credit card approval. The limit will be increased or decreased subsequently based on the card usage record. The temporary quota is relative to the dynamic fixed quota. It can be divided into active application for temporary quota and bank quota increase in batches. If an individual will make large purchases in the near future, such as buying furniture, traveling abroad, etc., he or she can proactively apply to the bank for a limit increase. Whether or not the limit is approved or the amount of the limit increase will depend on the individual's qualifications and card usage records. The temporary limit will be It has a certain validity period (1 month to 3 months).

2. Disadvantages of credit cards

The so-called disadvantages of credit cards are relative to the advantages. As a tool, whether the user can control it will determine whether the tool is overloaded and used beyond its scope. . Therefore, the above four advantages can also be regarded as disadvantages by many people.

For example:

1) Overdraft in advance can lead to impulsive consumption and excessive consumption by many people;

2) Safety and convenience can also cause hidden dangers of credit card swiping, and fraud incidents occur from time to time;

3) Installment payment is actually a credit loan, and the handling fee is converted into an interest rate, which is reasonable compared with crazy online loans. Basically, the annualized rate is around 18%-20%, and in some cases it is even lower, because product profits will be shared with product suppliers;

4) Temporary quota. There have been cases where some banking institutions have implemented large-scale temporary limit increases for cardholders, resulting in a large number of cardholders with weak self-control and unknown tricks. After the temporary limit was cancelled, they were left with a large amount of bills that they could not repay. , and fell into a debt vortex.

Therefore, there is no free lunch in the world. You must be rational in the face of money and financial tools. Understand the rules before using them. It is even more important to act within your capabilities and control your personal financial leverage.