Susan E. Thomas CPA
Advantages and Disadvantages of Credit Cards

Advantages Disadvantages
Convenience-- Credit cards can save you time and trouble--no searching for an ATM or keeping cash on-hand. Overuse-- Revolving credit makes it easy to spend beyond your means.
Record keeping-- Credit card statements can help you track your expenses. Some cards even provide year-end summaries that really help out at tax time. Paperwork-- You'll need to save your receipts and check them against your statement each month. This is a good way to ensure that you haven't been overcharged.
Low-cost loans-- You can use revolving credit to save today (e.g., at a one-day sale), when available cash is a week away. High-cost fees-- Your purchase will suddenly become much more expensive if you carry a balance or miss a payment.
Instant cash-- Cash advances are quick and convenient, putting cash in your hand when you need it. Unexpected fees-- Typically, you'll pay between 2 and 4 percent just to get the cash advance; also cash advances usually carry high interest rates.
Perks-- From frequent flier miles to discounts on automobiles, there is a program out there for everyone. Many credit card companies offer incentive programs based on the amount of purchases you make. No free lunch-- The high interest rates and annual fees associated with credit cards often outweigh the benefits received. Savings offered by credit cards can often be obtained elsewhere.
Build positive credit-- Controlled use of a credit card can help you establish credit for the first time or rebuild credit if you've had problems in the past--as long as you stay within your means and pay your bills on time. Deepening your debt-- Consumers are using credit more than ever before. If you charge freely, you may quickly find yourself in over your head--as your balance increases, so do your monthly minimum payments.
Purchase protection --Most credit card companies will handle disputes for you. If a merchant won't take back a defective product, check with your credit card company. Homework-- It's up to you to make sure you receive proper credit for incorrect or fraudulent charges.
Balance surfing-- Many credit card companies offer low introductory interest rates. These offers allow you to move balances to lower-rate cards. Teaser rates-- Low introductory rates may be an attractive option, but they last only for a limited time. When the teaser rate expires, the interest rate charged on your balance can jump dramatically.

Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011