The credit card industry is more profitable than ever. Credit cards can make life easier by letting you make purchases without carrying cash around. The truth is that there are many disadvantages to using a credit card which can outweigh the benefits if you aren't careful.
1. Interest Payments
One of the most significant drawbacks to using a credit card is the interest payments you will have to make. The average credit card interest rate is about 16%.
Another drawback to using credit cards is the numerous fees associated with them. These include annual fees, balance transfer fees, cash advance fees, and late payment charges, just to name a few.
3. The Danger of Overspending
When you use your credit card to make a purchase, it's easy to lose track of how much money you have available in your account since no physical dollars are being spent on cards.
4. The Minimum Payment Trap
If you constantly make minimum payments each month, it will take much longer to pay off your credit card debt, resulting in an excessive amount of money in interest costs.
One way to protect yourself from credit card scammers and thieves is by using your cards at well-known, reputable businesses where they are required to use more secure payment systems such as a chip reader.
6. Reduction of Future Income
If you're unable to keep up your credit card payments, the interest rates on any future purchases will likely skyrocket. Falling behind can lead to even more financial problems down the line and result in having a low or bad credit score which could affect your ability to buy things like houses, cars, etc.