Credit cards are great financial tools. They help us in times of emergency by offering payback options. We can purchase now and pay later with credit cards. Also, credit cards are a great way to build credit. You can create a good credit history by paying your credit card bills on time. Let us read on to find out the pros and cons of credit cards. 

Pros Of Credit Cards

You Can Pay Over A Period Of Time

With a credit card, you can pay for your purchases over a period of time, which is known as the credit card billing cycle. After the billing cycle is over and the lending institution sets your due date, you can pay on or before the due date. This will come in really handy when you need to buy an item immediately but do not have cash to pay for it currently. It is always good to pay your credit card bill in full each time as this will avoid penalties and interest. 

Building A Line of Credit

Credit cards offer you a chance to create credit history. Credit history is very important as lenders first analyze your credit history before issuing further lines of credit. They analyze your creditworthiness by examining your credit history. Lenders may not give credit to people who do not have a credit history at all.  

You Can Convert Your Credit Card Into EMIs

If you cannot pay your credit card bills fully, you can choose to convert them into EMIs. Converting your credit card bills into EMIs and paying them is cheaper than taking a personal loan to pay them.

Interest-free period 

Many credit cards come with 0% interest on purchases and balance transfers for a certain period of time. This is known as the interest-free period. This gives you the ability to use your card initially and pay off your balance without attracting interest. 

Also Read: Pros And Cons Of Using A Credit Card To Fund Your Small Business

Security Features

Credit cards are safer compared to conventional checking methods. If someone gains access to your checking account, they can drain out the funds, and then you would have to wait for the bank to step in and clear the fraud and replace your funds. But, if your credit card is stolen, then you will have to wait for the card issuer to clear up the fraud but you won’t be drained out in the process. 

Record of Credit Card Purchases

A credit record records each purchase you have made and sends it as detailed  List along with the credit card statement sent month-on-month. This can be used to monitor your spends and purchases, which can be used to chalk out a budget or for tax purposes. In the case of credit cards, there will always be this luxury of lenders sending you alerts each time you make a purchase about the credit limit available, how much total credit you have used till now, and the outstanding balance on your credit card. 

Reward Points 

Credit cards come with reward points and miles. You can even plan an entire vacation using your credit card reward points. When you use the right credit cards and use them judiciously, you can gain rewards enough to enjoy free flights and hotel stays. Not just this, some credit cards give reward points in the form of discounts and cashback. Only thing is that you should choose the right card according to your lifestyle. For instance, if you are traveling for long distances in your vehicle, you can use a fuel card and save up on your travel expenses.

Cons of Credit Cards

Credit Card Interest, Fees, and Identity

When you use a credit card, you will feel like your purchasing power is unlimited and you have a lot of cash. So, you may tend to use your credit limit excessively. You may not be able to pay your bills on time and you will be charged fees for making a late payment. Penalties will add up to your balance and this means that your penalties are charged interest as well. Credit cards are susceptible to fraud. Thieves hack your credit card details from the web through data theft and by stealing information from credit card companies. They will then use it unauthorizedly for fraudulent purchases. But typically, you are not liable if you report the charges right away. 

High-Interest Rate

If you do not clear your dues by your billing due date, the amount is carried forward and adds to the outstanding amount. Interest is also charged on it. Interest accumulates over the purchases that are made after the interest-free period. Credit card interest rates are high with the average rate being 3% per month which would amount to 36% per annum totally. 

Also Read: Pros And Cons Of Closing A Credit Card

They Lead To Debt And Affect Your Life

If you continue using your debit card to make purchases without paying off your Balances in full, then you will be accumulating debt. Also, defaulting on credit card bills will impact your credit score greatly. This will not only affect your future prospects to get credit but will also impact various other spheres of life, such as obtaining a visa, your professional life, and purchasing products and services. Applying For Too Many Credit Cards Can Affect Your Credit Score Multiple factors impact your credit score, and some of them are: 

  • Credit score 
  • Payment history 
  • Current amount owed  
  • Length of Credit history 
  • New credit
  • Types of credit used 

Each time you apply for a credit card, your credit history will be analyzed. If lenders find that you have applied for too many credit cards and are hungry for credit, they will not consider giving you further credit on the grounds of whether you will be able to repay so much debt, why you are so desperate for credit, and so on.


The above are some of the pros and cons of credit cards as discussed by CreditMantri. Although credit cards have cons, if you use them judiciously, they will be great financial tools. 

FAQS What Are The Pros And Cons Of Credit Cards?  

1:Are credit cards secure? 

Compared to debit cards, credit cards are safer. Purchases made using a credit card are safer. This is because any fraudulent transactions made using your debit card leads to the deduction of money directly from your bank account. 

2:What are some of the best reward credit cards In India just for you? 

  • SBI SimplyCLICK credit card
  •  American Express membership rewards credit card
  •  Standard Chartered Manhattan platinum credit card\
  • Standard Chartered Emirates World credit card
  • MakeMyTrip ICICI Bank Signature credit card
  • HDFC Bank diners club black card