What is one advantage and one disadvantage of a credit card?
Rachel Davis
Updated on February 01, 2026
Top 5 Pros and Cons of Credit Cards
| Pros of Credit Cards | Description | Cons of Credit Cards |
|---|---|---|
| Convenience | You don’t have to worry about carrying cash. | High Interest Rates |
| Rewards | Other payment methods just can’t compare rewards-wise. | Fees |
| Pay Over Time | You’re able to buy necessities without saving all the cash first. | Fine Print |
Is it better to not use your credit card or keep a balance?
It’s better to pay off your credit card than to keep a balance. It’s best to pay a credit card balance in full because credit card companies charge interest when you don’t pay your bill in full every month. You don’t even need to use your credit card to build credit.
What is 1 con of having a credit card?
Con: High Cost of Borrowing Although credit cards are convenient, the cost of borrowing is typically much higher than with a traditional loan. Many come with high APRs (the annual interest rate charged on borrowed funds), service fees, and penalties for late payments.
What are the pros and cons of debt?
Pros and Cons of Debt Financing
- Doesn’t dilute owner’s portion of ownership.
- Lender doesn’t have claim on future profits.
- Debt obligations are predictable and can be planned.
- Interest is tax deductible.
- Debt financing offers flexible alternatives for collateral and repayment options.
What are the benefits of using credit card?
Credit card benefits
- Opportunity to build credit.
- Earn rewards such as cash back or miles points.
- Protection against credit card fraud.
- Free credit score information.
- No foreign transaction fees.
- Increased purchasing power.
- Not linked to checking or savings account.
- Putting a hold on a rental car or hotel room.
What are the pros and cons of using credit cards?
It’s important to know the pros and cons of credit cards if you want to use them to your advantage. Building credit, earning cash back and benefiting from fraud protection are just a few of the many advantages of using credit cards.
What are the benefits of having good credit?
When you have good credit, the benefits can include better interest rates on mortgages, auto loans and credit cards, among other things. Credit cards can earn you rewards in the form of cash back or points, all for spending as you normally do.
How does missed repayments affect your credit score?
Missed credit card repayments and ongoing debts are recorded on your credit file and can impact your chances of getting a loan down the track. See our guide on how to improve your credit score for some tips. Credit card fraud. There are a range of fraud schemes that target credit cards.
What are the risks of taking out a credit card?
The possibility of debt: the main risk of taking out a credit card is that you could put yourself in rising debt if you aren’t able to pay back what you borrow. Your credit score: letting your credit card debt build up, or missing payments, can influence your credit rating.
