Credit Card Benefits and DrawbacksWritten by John Mussi
Credit cards have both benefits and drawbacks. It is wise to consider both before applying for a credit card. While they can be very useful, credit cards can also be risky. Even people who are usually good with their money get into trouble with credit cards. A credit card can be useful, but may also end up putting you in a difficult financial situation if misused. Here are some of benefits of credit cards: Withdraw cash 24 hours a day, anywhere in world. Buy online. It is quickest and easiest way, and you are protected against credit card fraud. Repay in regular instalments. Typically, these incur interest. Usually, there is an interest-free repayment period, which you can use to repay your debt in full, interest-free. One of main benefits of using a credit card rather than a debit card is protection provided by Consumer Credit Act. This says that if you have problems with goods or services you can get your money back from card issuer if you can't get it back from supplier. Some cards provide purchase protection insurance, which pays out if something you have bought with card is lost, damaged, or stolen within ninety days of date of purchase. A credit card can cost nothing - if you pick a card that doesn't charge an annual fee and you always pay bill in full every month. A credit card can save you money if you choose one that earns you cash every time you buy something. How much cash you get back is calculated as a small percentage of amount you have spent on card. Some cards offer incentives other than cash - Air Miles or shopping vouchers, for instance. Even if you do not pay your monthly bill in full, a credit card can be cheaper than running an overdraft on your current account, especially if your bank charges a monthly fee as well as interest when you overdraw. Using a credit card can work out cheaper than using traveller's cheques or foreign currency to pay for things abroad. This is because exchange rate used by card companies to convert foreign spending into sterling is better than normal tourist rates. However, because of credit card charges for cash withdrawals, a debit card is better if you want to use plastic to buy currency, whether over counter or from a foreign cash-machine.
| | Ethical finance: who benefits from our spending?Written by Rachel Lane
On one hand consumers are being universally criticised for running up significant amounts of debt on credit cards, yet conversely many companies are capitalising on growing credit card debt, from charities and political organisations to football clubs, Association of Surgeons and somewhat ironically ActionAid, an international development agency whose aim is to fight poverty worldwide. Financial comparison site moneynet.co.uk provided 226 credit cards in a general credit card search, from which consumer could choose a product to suit their lifestyle, as well as their wallet. Credit cards with charity branding involve many major organisations including Amnesty International, Christian Aid, WaterAid, RSPB, Save The Children, Ramblers Association, Oxfam, Greenpeace, Vegetarian Society, RSPCA, ActionAid, Children In Crisis, Help The Aged, Tearfund and Terence Higgins Trust. Perhaps it is fair to say that if people are going to spend on plastic, they should be helping charitable organisations on way and should they feel inclined to contribute to a political institution, donating a small % of each transaction is a convenient method. If most consumers were ethical spenders, then associations between transactions and third party beneficiaries would inherit this quality, but as debt spirals out of control, is it responsible or ethical that someone should benefit at cost of someone else?
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