Credit Card- A Plastic Money

Credit Card is a plastic card that is issued by financial company to the holders to borrow instant funds at the point of sale. It denoted the good credit ranking of the person and also is a promise that the borrower will repay the money within due date. It has become a lifestyle asset for the third generation people. But it can become liability to you if you do not have control on your spending. Here are some advantages and disadvantages of credit card payment.

Advantage of Credit Card Payment: 

• People can purchase items even they do not have money. The can take instant fund and can shop the items. 

• People are not required to carry cash to do shopping. 

• You can take the loan and at the same time have a reputation of good credit history. 

• People can do shopping anywhere. It helps you buy products online. Wireless Credit Card helps you make the payment online. Electronic payment system is really good and convenient mode to shop items. 

• It gives you reward points that you can redeem and enjoy the benefit.

Disadvantages of Credit Card Payment: 

• You are required to pay some extra amount for the product in the form of tax. Different companies levy different tax amount on Credit Card Processing. 

• You are levied heavy tax than that of normal loan if you cross the due date of payment. It also damages your credit rating. 

• It allows you to take more debt than that you can handle. It sometime makes you uncontrolled and you can buy unnecessary items at high cost.

Some Hidden Charges:

Nowadays most of the banks not informing the customers about the fees change and there is no clear intimation. It will affect your expenses and have to handle this clearly.

1. Avoid late payment fees

It is always keep in mind that the due date for all your Credit Cards. If you are missing the due, it will end up paying the late payment fees. Also periodically check for the due date, if there is any change by the bank.

2. Annual Fees

It is another expenses happening in the every year. If you taken the card with the life time free, then there should not be any fees for using the credit card. You have the rights to ask the company and they are responsible to provide the explanation.

3. Interest Rates

Learn about the Interest Rates of credit cards. There is lot of trick in explaining the interest rates by the banks. They will not tell you the annual rate for the credit cards. Because, it is higher than the other form of loans like Personal Loans, etc. It is always good to avoid taking the huge amount from the credit cards.

These are the advantages and disadvantages of credit card payment. Having a credit card is not bad rather it is an asset for you if you utilize it properly. You should try to make use of credit card only when you need urgently. It is for emergency and not for fun and entertainment. Understand the value of money and make its proper use. You will then find it to be an angel in distress.

Most of the people have a question in their mind that who give the instant loan to make the payment and how is credit card payment settled? The answer is – through merchant account. Merchant Accounts are special bank accounts that deal with credit card payment and settlement. These accounts are agreement between the credit card companies and the retailers to settle the payment.