Brief Overview of Credit Cards: Meaning, Advantages and Disadvantages

Introduction: Credit cards are among the most popular financial product of modern times. The introduction of plastic money has completely changed the methods of payment.

What is the meaning credit cards?

Credit cards are bank cards that enable us to buy goods and services without paying for them immediately. Only after a number of days or months will we have to settle our credit card bill with the bank.

‘Credit’ comes from the Latin word for ‘to believe’. The credit system of exchange is one where vendors provide us with goods and services, and banks provide us with a loan of money, because they believe and trust that we will pay them back later.

Advantages of credit cards.

1. Can be used anywhere. Credit and debit cards can be used throughout the world, both in an ATM and in a credit card machine.

2. A simple form of payment. Credit cards provide us with a form of paperless money. Paying with plastic means that we do not need to carry around bank notes or make sure that we have withdrawn enough money before heading to a restaurant.

3. Getting you out of a rut. If you have a big bill to pay today, but payday is not for a couple of weeks, a credit card can enable you to get out of this situation.

4. Secure. Password protected and carefully monitored by your bank, credit cards are a secure form of payment.

5. Can be used for online purchases. Credit cards can be used to make a safe online payment for everything from groceries to magazine subscriptions.

Disadvantages of credit cards.

1. Hard to avoid over expenditure. Credit cards may seem like they are giving us ‘free money’ – until we are hit by the bill later in the month.

2. High interest rates. Credit cards have higher interest rates than debit cards.

3. High late payment fees. Miss even one payment and you could be hit by a big fee.

4. Replacements needed regularly. It is necessary to get new credit cards at regular intervals, for security reasons.

5. Security compromises. You should never share your credit card details, password, etc. In case they are lost, never forget to call the bank immediately and hotlist the credit card.


A sign of social status or handy for getting out of temporary financial ruts because you buy now but pay later, credit cards can be helpful – but they can also land you in more debt.

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