Professional Documents
Culture Documents
Meby MMW
Meby MMW
1. Paying high rates of interest. If you carry a balance from month-to-month, you’ll pay interest
charges. Purchase and cash advance interest rates can be as high as 22% APR, so you can end up
paying hundreds or thousands more than you initially charged in interest if you’re unable to
make repayments each month.
2. Credit damage. Missed credit card repayments and ongoing debts are recorded on your credit
file and can impact your chances of getting a loan down the track. See our guide on how to
improve your credit score for some tips.
3. Credit card fraud. There are a range of fraud schemes that target credit cards. While you can be
compensated for illegal transactions on your account, dealing with credit card fraud can still be a
time-consuming and stressful experience. Scammers could use skimming devices, phishing
techniques and other tricks to steal your credit card information and your hard-earned money.
4. Cash advance fees and rates. Financial institutions make it very expensive to use your credit
card to get cash out or make other “cash equivalent” transactions, such as buying foreign
currency or gambling. Using a credit card for a cash withdrawal will attract a cash advance fee
worth around 3% of the total transaction amount. It also typically attracts an interest rate of 19–
22% right away.
5. Annual fees. While you can often get debit cards without annual fees, most credit cards have
them. These can cost as little as $25 per year, or as much as $1,200 depending on the card that
you choose. Generally, the more perks you want, the higher the cost of the annual fee. If you
want to avoid this charge, you can consider a no-annual-fee credit card — but make sure you
look at all the other features to help find a card that works for you.
6. Credit card surcharges. Businesses often apply a surcharge when you pay with a credit card. For
Mastercard and Visa products, this fee is usually 0.5–2% of the total transaction cost, while for
Amex cards it could be closer to 3%. Whatever the case, this is an extra cost for the convenience
of paying with plastic.
7. Other fees can quickly add up. Depending on your card, you could be charged fees when you
miss a payment, fees if you spend past your credit limit, fees for overseas transactions, balance
transfer fees and even some rewards programs fees. If you carry a balance or don’t have access
to interest-free days, there’s also a good chance interest will be applied to these charges.
8. Overspending. When talking about the pros and cons of credit cards, this is the classic
downside. Some individuals can get easily carried away with their credit card, creating a debt
that is beyond their means to pay off.