Credit cards

Refraining from Loans vs. Using Credit Cards
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Refraining from Loans vs. Using Credit Cards
Credit cards have become a popular purchasing tool in the modern era. The users are able
to purchase goods within the monetary limit stipulated by the issuer. Subsequently, the card
holder reimburses the utilized amount in installments (Arnold, 2008). There are various benefits
of using credit cards. However, there are some people who would rather abstain from any form
of fiscal advance. While this ideology has certain advantages over the use of credit cards, it also
has particular drawbacks. People who use credit cards are better off than those who refrain from
all forms of loans.
Firstly, refraining from loans may be inconvenient when one has limited resources.
Individuals who uphold this philosophy believe in saving money to purchase the desired item.
On one hand, this approach ensures that the individual does not spend money beyond his or her
purchasing power. Such people are of the opinion that relying solely on one’s savings is helpful
in conducting a comfortable lifestyle that does not entail the pressures of paying debts (Mooney,
2015). However, a person’s financial status may hinder them from meeting certain needs or
wants. Such a scenario warrants the use of a credit card. This purchasing tool allows individuals
to make payments for purchases within a specific limit and pay later in monthly installments.
Evidently, credit cards increase one’s purchasing power.
Additionally, credit cards act as a suitable buffer against unseen expenditures. Financial
experts indicate that everyone should maintain an emergency fund that equates to between six
and twelve months of one’s monthly earnings. The accumulated finances are necessary to cope
with unexpected events such as medical emergencies or a layoff. Unfortunately, the high cost of
living in the modern era may make it difficult to accumulate these finances (Mooney, 2015). A
credit card is helpful in dealing with the incurred expenses during such difficult periods. A user
is able to uphold maximum financial flexibility by making sure that their card has a wide
spending limit and minimum balance. With reference to the concept of emergency protection,
individuals who use credit cards are better off than those who refrain from all forms of loans.
Besides, credit card users enjoy a higher level of protection against monetary losses than
those who rely solely on savings. People who refrain from loans rely on debit cards to make
financial transactions in settings that do not allow cash. Unfortunately, debit card holders are at a
higher risk of experiencing fraud than credit card users (Arnold, 2008). This financial risk is
especially high when purchasing items online. Conversely, credit card issuers promptly refund
phony credit purchases. Moreover, in case of theft, the fraudulent charges presented to a debit
card holder are higher than those incurred a credit card user. For instance, if a debit card holder
does not report the loss within two business days, he or she may have to pay $500. On the other
hand, the loss of a credit card will cost the user $50. In fact, some issuers waive these charges
(Arnold, 2008). From the perspective of protection against fraud, credit cards are an apt
purchasing tool.
In line with the aspects discussed in this essay, refraining from loans is not necessarily
the most appropriate financial strategy. Indeed, a comparison between relying exclusively on
savings and using credit cards indicates that the latter approach has an array of benefits.
Increased purchasing power, fraud protection, and availability of monetary resources during
emergencies are some of the aspects that make it better to use a credit card rather than abstaining
from all forms of loans.
Arnold, C. E. (2008). How you can profit from credit cards: Using credit to improve your
financial life and bottom line. Upper Saddle River, N.J: FT Press.
Mooney, C. (2015). Understanding credit. Minneapolis: Lerner Publications.

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