Here are some of the disadvantages to consider before you add a new credit card to your wallet.
1. High-interest rate
You should clear all your credit card dues on time. In case you fail to clear your credit card bills, you will be charged a high interest on it. The interest rate on credit cards is as high as 3% a month. Interest will be charged only after the interest-free period. If you know that you won't be able to clear your credit card dues within the due date, it is better not to spend using a credit card.
Usually, people splurge more while paying with the credit card, than with cash. This is because you have time to pay the credit card bill. But when you pay with cash, you feel the rupee going out of your pocket and also know how much money is left in your pocket.
Many people are unaware of all the terms and conditions of the credit card. While availing a credit card, you should read all terms and conditions, including the small fine print. The small fine print says that at any point in time, the credit card issuer can increase the interest rate, fees, penalties with a short notice of up to 2 weeks
A credit card has many hidden charges that can increase your expenses. Credit card charges include joining fees, late payment fees, renewal fees and processing fees. You could even pay a penalty, if you fail to pay your credit card bills on time.
Your credit score will be badly affected if you default on your card payments and do not pay your credit card bills on time. Your credit score is very important and you will not get any loans in the future, if you have a bad credit score. So, you should always pay your credit card bills on time.