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Are Credit Cards Good or Bad?

Are Credit Cards Good or Bad?

December 20, 2021

Credit cards often receive a bad reputation. However, if used properly and not abused, they are actually beneficial in a variety of ways. At Compass Financial Services, our professional advisors in Des Moines understand that choosing to open a credit card account can be a difficult, and in some cases, an intimidating decision. That’s why we want to help! Keep reading to learn the pros and cons of credit cards and how to get out of credit card debt.

The Pros And Cons of Credit Cards

When our team is asked if credit cards are good or bad, our answer is “yes” because they can be good or bad depending on how they’re used. As long as you’re careful and don’t abuse your credit card, they can be extremely beneficial. But, credit card abuse can result in debt and will damage your credit score. However, in most cases, credit cards are really good for consumers. Three of the main benefits of credit cards are:

Building Your Credit Score

Acquiring a credit card is a great way to start building your credit score. This can be especially beneficial for young adults in college who are just getting started on their financial journey. Getting an early start on building credit can make finding a job easier because employers often look at a potential candidate’s credit score to determine how good they are at managing money. Additionally, if you are looking to rent an apartment, the property will likely use your credit score to determine the amount of your security deposit.

With so many places using your credit score, getting an early start on building credit will ensure you have a high (good) credit score. This will ultimately benefit you in the future, and a credit card is the easiest way to accomplish this.

Credit Card Rewards

Take advantage of credit card rewards! Rewards can include things like earning cash back, travel points and a variety of options as a bonus for purchases you were planning to make anyway. As long as you’re paying off your credit card every month, these rewards can be extremely advantageous down the road.

However, these rewards can often be used as an incentive by credit card companies to get people to spend more money than they can afford. It's important to not abuse your credit card and use it responsibly, otherwise it can end up being a pitfall.

Catch Credit Card Fraud Early

This is probably the most crucial benefit of credit cards. Nowadays, committing credit card fraud is easier and more common than ever. Credit card companies can catch fraud quickly and will usually pay for the mistake since it’s not your personal expense.

On the other hand, if a fraudulent charge is committed on your debit card, it is money coming out of your personal account. You might be able to get it back, but it often involves a long process that can take months. If you have payments to make during this period, your money's gone and you might be in a tough situation financially.

How to Get Out of Credit Card Debt

Getting out of credit card debt takes careful planning and patience. For starters, try not to use your credit card until the interest you owe is paid off. After that, we recommend you establish your finances and begin working on budgeting and spending habits to avoid more debt in the future.

While credit card debt can take time and determination, it’s an obstacle you don’t have to tackle alone. Set up a meeting with our Des Moines hourly financial planners to create a plan to get out of credit card debt. Our advisors will work with you to create a customized plan that helps you stick to a budget and work towards your goals.

Compass Financial Services Can Help You Get Out of Credit Card Debt

At Compass Financial in Des Moines, we offer a complimentary initial consultation to everyone. Reach out to our advisors today for financial planning services in Des Moines and start building your credit score. We look forward to working with you.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.