A Comprehensive Guide on Using Plastic Cards

Not too long ago paying for goods and services used to be done with cash or writing checks seemingly so long ago that many consumers may not even remember what that was like. Today, in our digital age it is all about plastic cards a much easier and more secure form of payment that carries advantages and disadvantages.

Introduction

Plastic cards are everywhere. From their traditional use in the form of credit and debit cards to the relatively new player in town -- mobile payments -- cards are the preferred form of payment among consumers. These cards first made their debut in the 1960s and are still popular today because of their convenience and ease of use.

Types of Plastic Cards

Credit Cards

Credit cards were the first installment of plastic cards that we got used to. It is a revolving loan agreement where the institution approves an extended line of credit and allows you to borrow money up to that limit. Credit cards are generally used for day-to-day purchases but can also be used as a form of emergency borrowing. Their fees and interest rate are usually higher than other plastic card alternatives.

Debit Cards

Debit cards are similar to credit cards in the sense that they come with plastic and a magnetic stripe, however they are linked to your checking account or other liquid accounts. Instead of borrowing money, you are spending the money you currently have in the bank. Generally speaking, debit cards don't have fees or interest and are a great alternative to using credit.

Prepaid Cards

Prepaid cards are a less popular but still very useful type of plastic card. These cards allow you to load small amounts of money onto the card and use them for a variety of different purposes. In essence, it is like having cash in your wallet. Prepaid cards can also be used to control spending, as once you load up the amount you wish to spend, you can't exceed it.

Pros Cons of Using Plastic Cards

Pros

• Convenience: plastic cards are a very convenient way of making payments. You don't have to carry around cash and worry about it getting lost or stolen.
• Rewards Incentives: credit cards typically offer points and rewards for making purchases. Debit cards and prepaid cards typically do not offer rewards.
• Security: when paying with plastic cards, you don't have to worry about someone stealing your cash or counterfeiting a check.
• Easy to Track Spending: with plastic cards, it is easy to track your spending and know exactly where your money is going.

Cons

• High Fees: credit cards typically come with high fees and interest rates, which can add up quickly if you don't pay off your balance.
• Can be Hard to Monitor Spending: it can be easy to lose track of how much you are spending if you are using plastic cards instead of cash.
• Debt: if you don't pay off your balance each month, you can quickly find yourself in debt.
• Increased Fraud Risk: as more purchases are made with plastic cards, there is an increased risk of fraud and identity theft.

Best Practices When Using Plastic Cards

• Pay off your balance each month: this will prevent you from having to pay fees and interest rates.
• Monitor your spending: be sure to check your statements each month to ensure that everything is correct and that you have not been a victim of fraud.
• Set a budget: it can be easy to overspend when using plastic cards so it is important to set a budget and only spend what you can afford to pay off each month.
• Choose the right card: there are a variety of plastic cards available so it is important to compare them and choose the one that best suits your needs and lifestyle.

Conclusion

Plastic cards are a convenient, secure, and accepted form of payment. However, they come with a variety of fees and interest rates, as well as an increased risk of fraud and identity theft. It is important to be aware of all of the pros and cons before using plastic cards and to play close attention to your spending to avoid getting into debt.