Advantages and Disadvantages of Credit Card


  • Free, short-term credit – you can avail a free short-term credit if you pay your balance on time or by the due date that will be shown on your statement.
  • Credit cards offer a safe and convenient way to pay for goods and services all over the world, especially when you purchased over the internet, phone or by mail order.
  • Purchase protection – under Section 75 of the 1974 Consumer Credit Act card issuers and retailers take joint responsibility for faulty purchases, you can claim a refund from the card provider.
  • Protection against fraud — if you are the innocent victim of fraud you will not be expected to pay if a criminal uses your card.
  • Incentives for using a card such as loyalty points and cash back, or payments to support a charity.
  • A truly global currency, as credit cards are accepted in virtually every country around the world.


  • You will incur interest if you are unable to repay your balance in full every month. Interest rates vary significantly so if you can’t afford to clear your debt you should look for a card that offers a competitive rate of interest.
  • The amount you can spend on a credit card is capped so you may not have access to as much money as you expected. Limits of between £300 and £500 are common for those who have never had access to credit before, while those with a good history who have shown that they use cards responsibly are likely to be offered a higher credit limit. That said, because of the credit crunch and rising levels of bad debt, providers are now more cautious about the amount they will lend. So even if you have a good track record with managing credit, you may be offered a significantly lower limit if you apply for a new card.

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