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1. More liberty to spend: People tend to get encouraged to spend in excess with a credit card at their disposal. Several credit cards are now offering the benefit of clearing credit in the form of monthly payments. This is going to make the situation even worse. A person with a spending capacity of $100 now has the flexibility to spend up to even $1000 because of credit cards.
2. Higher interest rates: The next disadvantage of credit cards is the higher interest rate charged by credit issuing companies on the purchases made by the customer. These charges are levied only when the customer fails to pay back the credit within a stipulated period of time, which is known as interest-free period. For every credit card, this interest-free period ranges from 30-45 days from the day of purchase.
3. Credit card frauds: This is the most significant disadvantage of using credit cards. There are several kinds of credit card frauds happening around the world resulting in loss of several millions of dollars every year. These frauds may occur when the credit card gets physically stolen or when the identity of the credit card holder is lost. Losing identity involves somebody stealing important details of the credit card that include the name of the card holder, credit card number, expiry date and the verification code or CVV number. The best way to avoid any fraud on the credit card number is to report the theft to the credit card company.
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