More For Your Money - University of Illinois Extension

Advantages and Disadvantages of Credit

Credit can be good when used wisely. It can improve a family’s level of living. For example, most people use credit to buy their homes. The main reason most people use credit is that they do not have the cash to pay the total cost of an item or service at one time. Another reason is that it may be easier to pay for an item through regular installment payments.


This activity can be filled out and printed, or it can be completed online to save your answers.

Using credit has both advantages and disadvantages. Read each statement below. Decide if the statement describes an advantage or disadvantage of using credit.

Credit is convenient. You do not need to carry a lot of money with you.
Credit usually costs more than paying cash. Interest and other charges may be added to the purchase price.
You may save money, because you can take advantage of sales.
Credit can help if you need money for emergencies, such as unemployment, illness, death, or property loss.
Credit is handy for making purchases through the mail, telephone, and Internet.
You may buy more than you can afford.
You can buy things that are needed now when you don’t have enough money to pay for them.
Credit ties up future income. When you use credit, you owe money that must be paid back from future income.