To get or not to get, that is the question!
Are credit cards good? They definitely are a major convenience. The question is; are they worth the convenience?
First; the advantages and disadvantages. The advantages are the fact that you do not have to carry cash around. This is a lot better, if somebody steals your credit card, there is generally a decent protection, however, if you are carrying cash, then you lost whatever you had.
Another advantage is the rewards that you get from the credit cards. Upon average, the return is around 1%. It really depends on the plan, because you can get up to 5% ( although I would not bet my horses on it.) However, the cost may outway the benefit. If you are late on any big payments, it may just cost you a lot more than one percent of your credit card spending.
Now we get to the most hated and loved advantage of credit cards. Who needs money, we can still splurge on things that we cannot afford, as long as we have credit! But then we pay. If you are not careful about your card, you can get hit with about a 33% interest rate per year!
So be really careful! If you want, you can try to find a card that has a 10% interest rate per year, so you do not have to have a steady income from month to month, and if you pay a month late, you only pay .85% of your balance. However, there does not have to be a tradeoff. Some of the cards have very good reward programs, and a very low "APR" rate. So if you are addicted to the thrill of getting rewards, and are worried that you may not pay the balance in full there are still many cards to fit your desires.
Let's do the math. Let's assume that you are getting a 1% return on what you spend on your card. Let's say you spend two thousand dollars a month on your card. You leave a balance once a year on your card. That is two thousand dollars, and ten percent is two hundred dollars. However, overall, you have gotten an extra two hundred forty dollars for using your credit card, so you have not lost.
It all depends on how timely you are. So make an excel sheet and pump in all your numbers, and see, do you really gain from the card that you want to get?
