Discuss the advantages and disadvantages of all the payments options. What payment option would you chose for yourself? Do you think that using credit/debit card is not secure or the online stores provide good security when shopping with credit/debit card?
Answers
Answer:
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Explanation:
How do credit cards work?
If you’re successful in applying for a credit card, you’ll receive the card in the post. Separately you will receive a personal identification number (PIN) to go with the card. Once you have your card and PIN, you need to activate the card, often online, for it to be ready to use.
You’ll be able to use your credit card to make purchases before paying back the balance, or part of what you owe, each month. There is usually a minimum monthly payment you should make to avoid any fees, but if you pay your balance back in full every month you can avoid paying interest at all.
This means that if they’re used sensibly, credit cards can almost function like an interest free loan. However, it you don’t make your payments on time you could face charges as well as high interest rates. Using your credit card responsibly can provide big financial benefits.
Should I apply for a credit card?
If you’re thinking about getting a credit card, you should consider whether you’re in the best place to make an application. While it can differ between providers, they generally use the following criteria to decide whether they’ll accept your application:
Your financial history: any County Court Judgements (CCJs) or bankruptcies in your history can make it less likely your credit application will be successful.
Your earnings: some providers require you to be earning regularly in order to qualify – some even have a minimum amount you should be earning.
Your credit score: lenders look at your credit history and report and use this information to assign you a credit score. As lenders each generate their own credit score based on their own requirements you could have different scores with different companies. Credit card providers use this score to determine whether you qualify for their credit card
When you apply for a credit card it leaves a record on your credit report, and the more applications you make – particularly rejected applications – the harder it could be to get credit in the future.
This is because too many applications could make lenders think you’re struggling with your finances or are an irresponsible borrower. As a result they may think you’re at risk of not being able to make your future repayments.
You can learn more with our guide on whether you’ll be accepted for a credit card.
Advantages of using a credit card
As long as you use them properly, credit cards can have a number of advantages over debit cards and cash payments. These include:
Spreading purchases out: with a credit card you’ll be able to spread out the cost of a large purchase, such as a home appliance, over several monthly payments. This can be useful for emergency situations where you might struggle to pay immediately for something you need
Buying now to pay later: it can also be a more convenient option to use a credit card, as it can let you buy a product or service but not pay for it until payday rolls around and you can make your monthly repayment.