Paying with cash, debit, or credit?

If you've never owned a credit card before, it's likely you're used to paying in cash or with a debit card. Credit cards sometimes have a bad reputation, but it also can be seen as a step toward financial independence!

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Either way, if you're thinking about getting a credit card, consider these top pros and cons of having one!

A woman in an eyewear shop using her credit card to buy sunglasses.

What is a credit card?

A credit card is a card that allows you to borrow money to pay for goods and services. However, when you use a credit card, you agree to pay back the money borrowed, plus any applicable interest and fees.

You can pay back the full amount by the billing date or over time. It's important to remember if you don't pay the full amount by the billing date, interest will start to accumulate and you'll end up owing more than the original amount!

Picture of different credit cards Photo by Avery Evans on Unsplash


1. Convenience

Most places accept credit cards, which are a lot easier to carry than a pile of cash. You also won't have to worry about carrying enough cash with you, especially with bigger purchases.

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2. Rewards Points

One of the benefits of having a credit card is that you gain "points" on your purchases. These points can be used for other future purchases like hotel rooms and even plane tickets!

Some cards even provide discounts or services like exclusive access to shows or airport lounges. Not sure which credit is best? Check out this Byte to help choose which credit card is best for you.

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3. Credit Building

Having good credit is important because it helps you borrow money at lower interest rates.Paying your credit card bill on time shows that you're responsible and have a good history of paying off debt.

Having a good credit history can come in handy if sometime in the future you need a loan to buy a house, student loans, and even insurance! Check out this Byte to learn more about building credit.

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4. Security

Credit cards are more secure than cash. If you lose your credit card, you can report it to your credit card company. They can freeze that card and investigate any suspicious activity.

If your card is stolen or lost, you're not responsible for any of the purchases made during that period. They also notify you if they detect any suspicious activity and you're not held responsible for it. The same can't be said about cash!

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1. Risk of overspending

The convenience of credit cards can make it easier for people to overspend and buy more than they can afford. This can lead people to dig themselves into greater debt.

Credit cards also have high interest rates, so if you're not able to pay your credit card payments off, interest accumulates — which will make it even harder to pay it off!

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2. Fees and Interest

There are some fees that come with having a credit card. This can include:

  • Annual fees

  • Late payment fees

  • Fees for cash advances

  • Foreign transactions fees

Also if you don't pay all of your credit card balance each month, any money still owed will grow interest. Next thing you know, you're paying way more than you planned!


Review these 4 descriptions of people with credit cards and their habits.

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Jackson is in high school and works part-time at a pizza place. He lives at home and struggles to pay his credit card bills on time.

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Marie has 1 more year of college left. She is currently working at her internship and is saving to hopefully buy a car when she graduates. Ever since she got a credit card, she always pays her credit bill in full and on time.

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Corey just started college and is not currently working. He has a little money saved but tends to put most of his purchases on his credit card. He finds himself quickly regretting most of the stuff he buys.

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Jasmine works full-time as a business analyst. It's been 2 years since she graduated college. She hasn't missed a single credit card payment but is looking to buy a house in the future and wants to apply for a second credit card.


Based on the descriptions above, who practices good credit card habits?

Bottom Line

Getting a credit card is an important decision and you should consider all the pros and cons before running to get one. But if you're responsible with your money, having a credit card can:

  • Help you reach your financial goals

  • Be super convenient

  • Provide extra security

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But if you're not careful with your credit card you can find yourself:

  • Stuck with major debt

  • Paying numerous fees

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Take Action

Chris Rock holding a credit card. He says, Now that you know the pros and cons of getting a credit card, follow these steps next!


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