Pros And Cons Of Credit Card


With the rise of consumerism in the modern world, credit cards are often seen as a sign of being financially independent. This is because a credit card offers you the additional funds you may require to meet any requirements – essential or otherwise. Moreover, the flexibility of usage and freedom to swipe the card whenever you desire to buy things you want, pay the food bill at an expensive restaurant, or even embark upon a foreign trip has made credit cards one of the favored payment gateways.

All the banks have credit cards in their product line and an online credit card application process by filling up the application form with some essential KYC documents. In addition, various banks offer attractive schemes, which become challenging to overlook. More often than not, you may find yourself in front of an online credit card application platform.

However, it would help if you weighed your options before using your credit card. While a credit card may genuinely come in handy in some emergencies, it may also increase the load of your borrowed fund. Therefore you must make yourself fully aware of the pros and cons of credit cards before using them.

What is a credit card?

A credit card is a pre-approved limit given to you by a bank. It comes in the form of an intelligent plastic rectangle flashing the issuing bank’s name on its face. You have the liberty to use the limit granted to you. The limit given on the credit card enables you to make purchases and even avail of certain services. Credit cards are not linked with any bank account; hence the usage of the card does not disturb your bank account balance. The amount spent on the credit card gets deducted from the credit limit. Your credit limit depends on your income and credit score when issuing a credit card.

Pros of using a credit card:

In the following section, we will look at the pros of having a credit card:

1.    Convenience in shopping:

Credit cards make your shopping hassle-free. With the help of your credit card, you need not move out; you may choose the items you want to buy and make online payments through your card sitting in your home. You acquire the materials you wish to and save on your cash flow as credit cards don’t hit your bank balance.

Also, most credit cards allow you to purchase and repay in equated monthly instalments. So if you are salaried, this may be an ideal way to buy things of your choice.

2.    Alternative for cash:

If you have a credit card, there is no requirement to carry cash. Instead, you have the choice of making purchases by swiping your card. Credit cards issued by leading banks are accepted everywhere. All you need to do is to enter your PIN after the card is lifted in the POS and walk away with the things you have bought.

3.    Win rewards:

Every credit card issuer runs reward schemes for its users. Apart from the rewards, there are cashback offers to give you an instant discount on a product or service you buy through a credit card. For people who travel extensively, features like travel insurance and access to the airport lounge come in handy. In addition, co-branded credit cards offer discounts when you buy fuel for your vehicle.

4.    Cash withdrawal facilities:

You may use a credit card to withdraw cash from an ATM. However, while doing so, please remember that cash withdrawal facilities on your credit card will fetch some charges you must pay along with the dues.

5.    Meet emergency expenses:

Credit cards come in handy when you are required to spend some money that is not pre-planned. A typical example of such a situation is when your near ones need an emergency fund for some urgent medical treatment. Unfortunately, you may not have the time to withdraw cash or apply for a personal loan and swipe your credit card to meet the fund’s requirements.

6.    Proves creditworthiness:

Timely repayment of credit card dues and diligent use of the card positively impact credit rating agencies. This may go in your favour if you are looking for additional funds as a loan to meet some financial obligations.

Cons of using credit cards:

While we have discussed the pros of using a credit card, there is another side. Let us have a look at some of the cons of using credit cards:

1.    High cost of borrowing:

The interest rates charged on purchases with your credit card are considerably higher. In addition, there are service charges which are levied on your dues. Therefore, even a slight delay may fetch a penalty making your repayment much dearer.

2.    Makes you spend more than you need:

The credit card in hand often leads to a debt trap. You have the freedom to spend even if you do not have money in the bank, which gives you that false comfort. Unfortunately, people often go overboard, spend much beyond their means, and find it challenging to repay. Once you get into the rut of revolving credit, you pay interest upon interest while your outstanding remains almost the same.

3.    Negatively impacts your credit rating:

You never know when you may require additional funds to meet some necessities. If you have overspent on your credit card and do not have a clean repayment record, it goes against you. This will have a direct impact on your credit rating. It will become very challenging for you to avail of any loan in the future as any lending institution will refer to your credit score before processing your loan application.

Credit cards have become a part of our lives, and there will be situations where they will be used. Therefore, one has to be diligent and use credit cards with discretion.


One may conclude by saying there will be situations where additional funds may be required at a moment’s notice. Credit cards come in handy in those situations. You may make high-value purchases on your card and repay the same in instalments. At the same time, you need to show responsibility in your spending pattern. Overleveraging on your credit card will hit your financial plan and will impact your creditworthiness negatively. Please apply due diligence before swiping your credit card next time. There are online platforms like Piramal Finance that will help you better understand this.