In this modern era with the rising of e-commerce in the world, the usage of credit cards is getting popular among the world nowadays. The usage of credit cards has actually spread towards college students and has increased visibility. Meanwhile, this is the best chance for the credit card companies to put on target at college students because college students are expected to have higher earning power and this makes the credit card companies believe that as a desirable market. A credit card can be best defined as a small plastic card issued by the bank to the consumers to purchase goods and services in advance with a credit limit on the spending. With a credit card, the users are able to purchase goods without using cash. Users will have the ability to use it as online payment on the internet and use it as monthly installments for large-volume goods and services. However, interest charges are applied to the credit cards.
There are many different types of credit card associations nowadays. For example, American Express, Diner Club, MasterCard, Visa, and many more. Each month, the credit card user is sent a statement by the bank that indicated their purchases for the previous month. After the cardholder received the statement, he or she must pay the number of their purchases otherwise may choose to pay a higher amount when the credit issuer charges interest on the amount owed. Even credit cards have higher interest rates than most consumer loans; many people still prefer to use it yet. This is because almost every store that we can see allows for payment of goods and services through credit cards today.
The increasing number of banks that provides credit card has eventually increased the competition between banks in attracting the customers. Every bank has tried its own way to persuade the customers to apply the credit customers. The worst part is, they even attract college students by having promotions in the college. Historically, the bank actually started to bump into the student credit card market in the late 1980-s. In the long run, this will cause many problems for college students. This is because most college students do not how to plan their money effectively. Most of the students will have credit problems is because college students do not practice having a written budget. The incredible increase in the usage of credit cards actually has demonstrated the crisis among college students. The increased number of credit cards among college has seen major growth in the past decade.
Advantages and Disadvantages of Credit Cards
A credit card is an Automatic advanced card that people can use to get goods without paying the cash. Credit cards are widely used by people all around the world as a source of convenience to get what they need. But, there are many advantages and disadvantages of using it.
One of the advantages of credit cards is that credit cards can eliminate the need to carry large sums of cash wherever we go. For example, if we are away from home for vacation, we don’t need to take a large amount of cash in our pocket. Besides, credit cards may also offer us additional protection if goods that we bought are lost, damaged, or stolen. This is where the credit card company can know that the fact that we have made a purchase. In addition, we can also see that some credit card companies offer insurance for customers on large purchases. In this way, the companies can protect their customers and give their customers the security of using the card. A credit card can also assist us to build a credit line. Having a good credit history is very vital, which meant that making payments on time and in a full month, helps us not only applying for a credit card, but also when applying for loans, rent, or even some jobs will more easily.
In conjunction with that, credit cards can also be useful in times of emergency as well. For example, students with a credit card can take the necessary actions by helping parents when they fall ill, a car is damaged, or trying to buy a higher-cost book in the university. Some credit cards also offer some extra benefits for their customers, such as discounts from particular stores or companies, bonuses such as free airline miles, or travel discounts. All of these benefits are helpful for us as long as we bear in mind that out spending limits.
On the other hand, the disadvantage of credit cards is that they encourage people to spend money that they don’t have. The customers can spend any time as they want even they have less money. Indirectly, the customers cannot pay for the bill statements that they had spent. In this way, the more money the customers owe the credit card companies, and yet they will charge the customers on interest each month on their spending. The other disadvantage of credit cards is that the credit card companies will charge the customers a high amount of interest on each balance that the customers don’t pay off at the end of the month. This is how credit card companies make their money and this is how many credit card users will get into big troubles. And, credit card fraud also is one of the disadvantages. This is where the credit card also the same as cash, it also can be stolen sometimes. They maybe are physically stolen from customers’ wallets or credit card numbers and use to swap the money. The good news is that, when we realize our credit card is stolen, quickly we can report to the credit card companies. This is to avoid us not being charged for any purchases that someone else has made.
In a conclusion, credit cards can make life easier and convenient for users as they utilize them wisely. But, if we use it wrongly, it will become a huge financial burden for us. If we decide to use credit cards, we must know some simple rules such as limit our purchases, don’t spend outside our budget, pay off the balance at the end of each month, and most importantly is don’t give credit card information to anyone else as the safety methods.