Credit cards can negatively impact a client’s potential for receiving approval on their home loan application. Brokers should be well informed on the advantages and disadvantages of credit cards to successfully assist their clients with any questions or concerns that may arise.
What Are the Advantages of a Credit Card?
- Assistance with building credit scores and financial histories
- Potential access to travel insurance
- Potential access to price protection insurance
- Access to cashback options
- Potential access to various types of rewards, including frequent flyer points
- A fast, easy, and convenient way to fund purchases
- Global use
Credit cards come along with a wide variety of advantages, including the examples we listed above. Clients need to research and compare the various credit card options available to them to determine which option provides the most benefits and rewards as well as a low-interest rate.
What Are the Advantages of a Credit Card?
- The potential of being charged high-interest rates
- The potential to negatively impact credit scores if the client does not make the necessary repayments and allows debt to accumulate
- Fees and costs associated with credit cards, including annual fees, international transaction fees, late payment fees, balance transfer fees, and cash advance fees
- Risk of credit card fraud
- Ease of overuse which can result in high credit card balances
While credit cards come along with some great advantages, they also have various disadvantages like the examples we listed above. Clients should understand that credit cards have the potential to negatively impact various financial aspects, including debt accrual, credit scores, and financial histories, and may result in financial hardships if the client does not successfully manage their repayments.
An online Credit Card Calculator can allow clients and brokers to gain an idea of what their potential or existing credit card repayments will look like.