When we need to buy a high value item, is it worth using a credit card? If so, what are the advantages and disadvantages? Moneycom clarifies your doubts!
Evaluate Item Purchase
Is the value of the item really high? Is the installment payment worth it? Is it interest free? You need to evaluate all these points to see if your credit card purchase is really beneficial or if it is worth waiting a little longer to pay in cash.
The Credit Card Advantage
The main advantage is safety, as you don’t have to walk the city streets with a large amount of money in your pocket. In addition, transactions with large amounts are confirmed by the credit company itself, most often at the time of purchase or days later. This occurs as a way to prevent fraud. Imagine if they used your credit card and you just had to pay the bill without purchasing the product?
The danger of revolving credit
Despite the main advantage, there is also an imminent danger when a long credit card installment is made: revolving interest (see more here ). In May 2016, the Lifecore Bank announced the record interest rate of this modality, which reached 449.1% per year! Therefore, plan to not have your monthly planning hampered.
Do not use excuses!
Another advantage of the credit card, besides the immediate cash, is the loyalty program that the operators maintain with the customer, where the amount spent can be converted into bonuses, miles and even discounts. These advantages are unique and also make your eyes shine, however, they are no excuse for excessive and uncontrolled card use. So, don’t be fooled by seasonal offers. They may be temporary, but the debts that remain are not.
Remember : High-value purchases that your credit card company is not used to seeing on your statement should be informed in advance as it prevents them from being canceled.
Thinking of making a high value purchase but don’t want to use a credit card ? Why not consider taking a personal loan then? According to Moneycom, the Total Effective Cost (CET) can range from 2.79% to 5.26% per month, depending on the customer’s credit analysis and installment option.