4.3.2 Benefits and risks of credit cards

From: Financial Consumer Agency of Canada

A credit card is a financial tool. Like any tool, it can provide advantages when used well, and disadvantages when used improperly.


  • lets you borrow money instantly to make purchases
  • allows you to carry less cash
  • lets you get cash advances
  • lists purchases in one monthly statement
  • helps you establish a credit history and earn a good credit score
  • provides a free form of credit if you pay the balance in full and on time
  • provides a convenient payment method for purchases made on the Internet and over the telephone
  • has limited liability in case of fraudulent use
  • may offer extended warranty and purchase protection benefits on most credit card purchases, as well as other rewards and benefits.


  • allows you to build up more debt than you can handle
  • damages your credit score if your payments are regularly late or you don't repay
  • costs much more than some other forms of credit, such as a line of credit or a personal loan, when interest charges are incurred.
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