Credit Cards: The Good and the Bad

Credit Cards: Weighing the Benefits and Drawbacks

Credit cards can be a great addition to a day-to-day financial plan. But beware, they may also impact credit negatively if not used responsively.

Here are some of the pros and cons of using credit cards, according to Forbes:

The Good

  • A great way to build credit

Each time a person opens a new credit card account, the lender reports the activity to a credit reporting agency. A credit history determines a credit score, and good credit can help to reach financial goals if used responsibly.

  • More secure than cash

Credit cards offer a level of security. If a person loses a credit card or someone else steals their information, the credit card company can place a hold on it to avoid fraudulent purchases. Credit card companies also monitor suspicious activity.

  • Rewards points

Cashback or airline miles are some of the perks that many credit card companies offer their clients as reward points.

The Bad

  • The high cost of borrowing

The cost of borrowing with cc is typically much higher than with a traditional loan. Many come with high APRs (annual interest rate charged on borrowed funds), service fees, and penalties for late payments.

  • Easy to overspend

Depending on the credit limit, a new credit card makes it easy for a person to overspend if they’re not disciplined.

  • Too many credit cards applications can damage credit

Too many credit cards applications can negatively impact a credit score and may raise suspicions for lenders, who may reject an application.

Credit cards could be a strategy to use in a financial plan, but it’s essential to consider all the advantages and disadvantages.


CC undoubtedly offer numerous advantages, from building credit to earning rewards. However, their misuse can lead to financial pitfalls. Being informed and disciplined is the key to harnessing their benefits without falling into debt traps.

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