Credit cards have become a part of our daily life. Millions of Americans have credit cards, and to an extent getting your first credit card almost feels like a right of passage into adulthood. However, as convenient as these credit cards are, they can lead to major debt problems if you decide to spend more than you can handle. In order to avoid that, you may want to think about getting a charge card instead.
But first, consider what the pros and cons of charge cards are.
The PROS of a charge card:
- When you get a credit card, you are given a total dollar limit you can spend on it, and an interest rate that will be charged on your balance. For example, you might get a credit card with a $5,000 limit and a 17% interest rate. You will also be required to pay a minimum monthly payment on the balance. If that’s all you make and you reach your limit of $5,000, that balance can really grow, and soon your owing a lot more than you actually paid for. Not so with a charge card. One of the biggest pros of a charge card is that you must pay off your entire balance at the end of your billing period. There are no minimum payments to make, just the whole amount and that’s it. When you pay this off, your balance is cleared to be used again. Because you pay this entire balance off, your charge card does not charge you interest which can also save you a lot of money.
The CONS of a charge card:
- If you have a $2,000 balance on your charge card that you have to pay off and tomorrow is the deadline, but you’ve only got $1,500, then you’re going to have a problem. If you had credit card, a minimum payment would be a lot more manageable.
Whether you decide on getting a charge card or a credit card be sure evaluate your finances so that you can make the right decision for yourself.