Disadvantages of credit cards : Thrifty and balanced spenders won’t have much trouble with credit cards. For them, credit cards are truly a convenience. Most people however are neither balanced nor thrifty which is why Credit Card companies are able to stay in business and make such huge profits. Here are some of the disadvantages of credit cards :

• Overspending: People with a credit card in their hands and surrounded with too much consumer goods and advertising tend to lose their heads. It is easy enough to whip out the credit card and ‘charge’ items but when the bill comes due, problems roll in.
• Many credit card companies give extended credit for up to six months – while at the same time increasing the interest rate over those months on all those balances. People who are unable to control their spending might find themselves with huge balances and massive interest rates owed to the credit card company finally. It could cripple their finances and in the worst case scenario, even bankrupt them.
• High Interest Rates: Most credit card companies do not charge interest on the immediate month. So, if customers pay off their balances at the end of each month as they should, they won’t have any problems. However, a very high interest rate, far above market norms is charged on balances carried forward.
• If customers are in the habit of paying only a stipulated minimum amount every month, they start accumulating debt, which with the high interest rates will again lead to crippling finances.
• Terms and Conditions: Always read the small print in the contract. Terms and conditions vary between credit card companies. Their interest rate charges vary widely as well as how they charge that interest on amounts owed.
• Some companies for example charge interest on the entire amount initially credited to the customer, even if he has paid back some part of it.  I.e. if a customer owes $100 at the end of the month and pays it back fully, no interest is charged. If however he pays back $99 and carries forward only $1 to the next month, interest is still charged on the entire $1oo.
• Credit Card Fraud: This continues to be a problem although in most cases, the customer does not lose much by it – provided he/she is careful. If a credit card in lost or stolen, it can be canceled by the owner. However, some fraud occurs without the card being stolen, merely by stealing the card number. Laws are however in place to ensure that a customer is not unfairly charged for credit card fraud. All the customer needs to do is be vigilant to see what kind of purchases are being made on the credit card and check the monthly receipts to ensure that only legitimate purchases have been charged for.

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