Many of us have credit cards and they can be very useful. However, if you have never had one before you may wonder whether it is something that you should consider. You may also wonder whether you should continue to have one as you get older. It is worth thinking this decision over as there are advantages and disadvantages to a credit card.
How a credit card works
Even if you have a card it is worth reminding yourself of how it works. A card can be used to purchase things in the same way as cash or a debit card can be used. This means that you do not pay for the items that you have bought right away. You will receive a statement up to six weeks later and you will then be asked to pay what you spent. You will have the option of paying off everything that you owe with no charge or paying back a minimum amount which will just cover the interest payments of the credit that you are taking advantage of and possibly pay out a small amount towards repaying the card. This means that you can make purchases more affordable by spreading the cost but you will have to pay for the privilege.
So if you want to buy things and pay later the credit card can be very useful, just like a bad credit loan. Even if you pay for it when the statement arrives you will still have delayed the repayment for a small amount of time. If you opt to not repay it then you can delay it for even longer and this can be handy if you cannot afford to pay for the items right away.
A credit card also has security features, which are particularly useful when you are buying online but can also be advantageous at other times to. This is because they offer protection, so if you buy items which turn out to not be what you expected or do not turn up at all and you have no luck in getting a refund from the retailer, you can get the money back through the credit card issuer. This can add a layer of security when you are buying online. In fact, credit card issuers have great fraud departments too so if you card details are stolen, they will very quickly cancel the card, as soon as they know and repay any money that has been stolen from you. This is done much more quickly compared with when you use a debit card or a bank transfer and with the latter two you may not get back the money that was lost.
The interest on the card can be quite expensive and perhaps more so than other types of borrowing. This means that you will be wise to think about whether this is the best type of borrowing if you are looking to use the card for borrowing. Some people might also be tempted to spend more than they normally would because they have the option of repaying it in the future rather than paying for it right away. This will cost money and it can be easy to forget about how much it will cost.
Am I too Old?
It is worth remembering that if the bank thought that you were too much of a risk to have a credit card then they would not let you have one. They will do a credit check and if they think that you will not be able to repay the card then they will not let you have one in the first place. However, if you are on a reduced income, perhaps on a pension or working less hours, then it might be wise to think carefully about whether a credit card is the right choice for you. You will know whether you are likely to be self-disciplined and use the card to your advantage and pay it of fin full each month. You will not even have to worry about forgetting to do this as you can set up a direct debit to pay off the card in full.
Age might actually be an advantage when taking out a credit card. This is because you have had a lot of experience of using money and budgeting and perhaps borrowing as well. You are more likely to be sensible when you are using it and keep a close check on how much you are spending and make sure that you are paying it off. You will also know whether you should even consider taking out a credit card at all. You will have an understanding of your financial record and whether you are likely to use it wisely or not. You will also know whether you are likely to find it useful. If you do buy things online then it could be very useful to have a card to provide that extra security that you need. However, you may not buy things online and so it may not be of very much use to you.