Question

Credit cards can provide a great amount of convenience and security in performing your financial dealings. However, they can also be the root of financial problems, even financial disaster. Explain what you think are the two main caveats to consider when using credit cards.

Answer 1

Two caveats to consider when we are using credit cards are as follows-

A. Getting into credit card debt- when there is a habitual shift of the individual to use more debt than he is able to repay and there will be an additional load on the individual and he will keep on using extra credit card limit and getting into the credit card debt and it can be very serious at the time of the financial downturn when his income will be going down as he will be getting into serious financial distress

B. Hidden terms in the credit card- As they say that the devil is in the details, so credit card will also be hiding a lot of informations which are causing a lot of money but user wont to be aware about it, so he must be highly aware when applying for a credit card and agreeing to the terms and condition of the credit card because he can be getting into higher amount of annual percentage rates and other penalties and charges he does not even know about.