A credit card is another form of payment that could be used instead of cash. Credit card payments can be thought of as short-termed loans from the bank. By using a credit card you are borrowing the money from the bank which you could repay after a specific time period and for most credit cards, this is billed monthly.

Credit cards offer you a credit extension that can be utilized to make purchases, balance transfers and additional loans ultimately necessitating that you repay the loan later on. This system of payment can be used to your advantage if you are a good money manager and would prefer your capital to be deducted at the end of the month or whenever you set your payment billing cycle. It allows you to generate supplementary income with your money while still being able to pay for the things you need or want.

Advantages:

1. Paying for purchases over time: A credit card is nothing but borrowing money from the bank to pay or to purchase daily requirements (or just your good old fashioned wants) and payback that borrowed money over time.
2. Convenience: One of the best reasons for using credit cards is for its convenience. A simple card is the solution to lighten the weight of that wallet of yours that has become used to carrying notes and those unnecessarily heavy coins.
3. Credit card rewards: The growth of the credit card sector has led to some brilliant perks being attached to credit cards. These perks increase with loyalty to the bank and increased spending. To the consumer, if managed carefully, the credit card perks are a great way to reap some benefits where they weren’t offered before. Perks today include a discount on air travels and accumulation of air miles, getting reward points that can be redeemed later and even rewards for spending on regular chores like grocery shopping.

Disadvantages:

1. Overspending: Credit cards can make life simpler, however, they can also make overspending simpler. With a credit card, you're going through cash you don't really have yet. In case you're not cautious, this can rapidly lead to surprising debt.
2. Interest and fees: Using credit is essentially borrowing. And you’re not borrowing for free. Mismanaging a credit card can lead not only to a high balance or a maxed-out card but also lead to debt in the form of interest and fees.
3. Mounting debt: If you carry out an unpaid balance on your credit card from month to month, then it can be very very easy for charges and interest to rack up. And many of the credit card users don’t expect that it is the gateway to extra debt and if you’re not careful, that’s exactly what happens.

We have weighed the pros and cons of credit cards for you, but the decision of using a credit card or not is dependent on you and how well aware you can be of your spending habits and needs.

When should you get a credit card?

If you have a stable income and the ability to pay off the spent money at the end of the month, you should get a card. You can also reap the benefits of these credit cards if you are a frequent traveller or make purchases for you or your businesses through the month but prefer losing your capital only at the end. Mind you, all these cases require that you are a disciplined payer and can manage both your income and expenditure well.

When shouldn’t you get a credit card?

If you frequently get carried away with your expenditure or have very little spending to take care of, you should get a credit card. Defaulting on credit card payments is not only bad in the short term but also affects your credit score. This can be a deal-breaker for you when applying for loans or trying to find a property that you want to live on rent.

Having a credit card does not give you the liberty to worry about your expenditures at the end of the month, in fact, it is quite the contrary. Our advice would be to chart out your expenses early at the beginning of the month and then use your credit card only to that point. Remember, the difference between reaping credit card benefits and drowning in credit card debt is simply your awareness.

In Conclusion:

Remember, getting a credit card is a decision you should only make if you are the kind of person that is rational, remains financially savvy and can evaluate yourself as a person before taking this step.