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The benefits of having a credit card are many but unfortunately, like so many aspects of life, having a credit card is a two-sided coin and just as the benefits are many, so too are the dangers. It is important therefore for credit card users to have some overall idea of how credit cards work and how they can optimise the benefits and minimise the dangers and the drawbacks.

The first benefit which one may be likely to consider of having a credit card is the convenience which it affords. A credit card opens up a whole new world of payment opportunities for account holders, including - but not limited to - making purchases online or over the telephone. A credit card also very often eliminates the need for one to visit one's bank or what may be an inconveniently located ATM in order to obtain cash on such a frequent basis as would otherwise prove necessary.

Security is another benefit of having a credit card. Should the credit card be lost or stolen, the matter should be reported to the credit card provider without delay and the card will immediately be cancelled. This limits the potential loss to the credit card holder which would of course be automatic in the event of the loss or theft of cash.

Another benefit of having a credit card is that it allows the card holder to defer payment for items until a later date. This is because a statement is received on the credit card only once a month, detailing the outstanding balance and the date by which same should be paid. If the credit card account holder is careful in the manners in which they use their card and clears their bill each month, this can be a very useful facility.

The dangers of having a credit card are ones which all credit card holders should be aware of. It is imperative that credit card holders safeguard the security of their card and PIN at all times. Cards should always be signed on the reverse immediately upon receipt and a note of the PIN should never kept along with the card. Credit cards should also never be left in places such as cars or office desk drawers where they are more susceptible to theft and possible misuse.

Over-spending on a credit card and subsequent debt problems are also a danger to many who see the card as being an irresistible temptation. This is something over which tight control must be maintained and there is always an option to ask the credit card provider to reduce the credit limit on the card to minimise the likelihood of this occurring.

The benefits of having a credit card are therefore very real, provided the card holder takes sufficient steps to safeguard its security and moderates their usage of the credit card in an appropriate fashion.

Learn more about this author, Gordon Hamilton.
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