Which of the following is a disadvantage of using a credit card Quizlet?

Disadvantages of Using a Credit Card

Credit cards offer convenience and flexibility, but it’s essential to be aware of their potential drawbacks to use them responsibly and avoid financial pitfalls. Here are some of the disadvantages of using a credit card:

High Interest Rates: Credit cards typically come with high interest rates, especially if you carry a balance. If you don’t pay off your balance in full each month, you can end up paying a significant amount of interest, which can quickly add up and become a burden.

Cash Advance Fees: Using your credit card to withdraw cash is known as a cash advance. Cash advances often have higher interest rates and fees compared to regular purchases. The charges can vary depending on the card issuer, but they can be as high as 5% or more.

Penalties for Exceeding Limit or Missed Payments: Most credit cards have a credit limit, which is the maximum amount you can borrow. If you exceed your credit limit, you may incur a penalty fee. Additionally, missing a payment on your credit card can result in late payment fees and damage your credit score.

Responsible Card Use is Crucial

To avoid these potential financial pitfalls, it’s crucial to use your credit card responsibly. Here are some tips:

• Pay off your balance in full each month: This will help you avoid paying interest and keep your debt under control.
• Avoid cash advances: If possible, avoid using your credit card to withdraw cash, as it can incur higher costs.
• Stay within your credit limit: Keep your spending within the credit limit set by your card issuer to prevent penalty fees.
• Make your payments on time: Always make your credit card payments on or before the due date to avoid late payment penalties and protect your credit score.

By following these tips and being aware of the potential drawbacks of credit card use, you can enjoy the convenience and benefits of these payment instruments while minimizing the associated risks.