Credit Cards Explained: Their Value and Risks in Today's Market
- fotaquest
- 4 hours ago
- 4 min read
Credit Cards Explained: Their Value and Risks in Today's Market
By Lars Guo
Published: December 29, 2025
Opening Message
Hi folks! Happy holidays! I hope everything is going well for you and that your holiday season has been amazing. Today’s post is about credit cards. This is purely my opinion, and you are free to disagree with me. All I ask is that everyone remains respectful. Thank you.
Background
I got into credit cards after receiving my very first one in 2023. At that point, I had the cash flow to responsibly handle a decent credit card limit. Before applying, I spent a lot of time watching YouTube videos about credit cards so I could educate myself on which cards were considered good options and which ones I should avoid. Doing research was and still is extremely important because without it, you can easily leave money on the table by choosing a card that does not benefit you. I got my newest credit card in December 2025 after spotting a great opportunity for higher cash back in grocery and dining categories, which will be especially useful for me next year.
Audience
This post is for people who are responsible with money and for those who want to build credit for apartments, loans, or other major financial goals. Credit cards are best suited for people who do not spend money they do not already have and who understand the importance of paying balances on time.
What Is a Credit Card?
A credit card is a card that allows you to make purchases up to a certain limit before you need to pay off your balance to free up available credit again. Credit cards use borrowed money, and as the cardholder, you are expected to pay back what you spend by the end of each billing cycle. The exact timing of billing cycles varies depending on the credit card company and the card holder’s agreement.
What Is the Difference Between a Credit Card and a Debit Card?
A debit card draws money directly from your bank account. The funds are removed immediately at the time of purchase, whether you are paying for a product or a service. Most debit cards do not offer cash back features, and you earn no interest by keeping money in a checking account linked to a debit card. If you want to earn interest, a savings account is the better option. Debit cards are best used for payment apps like Venmo because they do not charge cash advance fees the way credit cards often do.
Perks of a Credit Card
Credit cards are generally safer to use than debit cards. If fraudulent purchases occur and are reported in a timely manner, the issue becomes the credit card company’s responsibility rather than yours. In many cases, you will not have to pay for those fraudulent charges. It is also much easier to recover funds compared to debit cards, where money is taken directly from your bank account.
Most credit cards offer some form of cash back or travel points that can be redeemed later to reduce the cost of flights or other purchases. If your credit score is high enough, you can apply for premium credit cards and qualify for sign-up bonuses. Some cards offer bonuses regardless of credit score, while others do not offer bonuses at all. Both of my credit cards came with a $200 sign-up bonus after spending $500 on eligible purchases.
Many credit cards also provide travel portals where you can earn extra cash back or redeem points for better deals on flights, hotels, rental cars, and even airport lounges such as Capital One Lounges or Chase Lounges. Another major advantage is that you do not have to pay for purchases immediately, which can help with short-term cash flow if managed responsibly.
Some credit card companies also offer additional shopping portals. For example, Capital One may offer extra cash back for purchases made through retailers like eBay or CVS. These percentages change over time and stack on top of your card’s standard rewards. For instance, if my card gives 1.5 percent cash back and the portal offers an additional 4 percent, I effectively earn 5.5 percent cash back on that purchase.
Cons of a Credit Card
For people who do not pay off their credit cards in full every billing cycle, high interest rates can quickly become a serious issue. It is very easy to fall into debt, especially since credit cards make it tempting to spend money without paying immediately. Carrying a balance can also negatively impact your credit score.
While balance transfers with zero percent introductory APRs can delay interest, the debt still has to be paid eventually. Credit card companies are also strict about approvals, and holding too many cards with certain banks can result in denials regardless of how strong your credit score is. Some banks are also very conservative when it comes to increasing credit limits.
Not all credit cards offer perks, and some provide little to no value. Closing a credit card can negatively affect your credit score because longer account history generally helps your score. Opening a new credit card can also temporarily lower your score.
Would I Get a Credit Card If I Had to Start Over Again?
Yes, I would. I have proven my financial responsibility and genuinely enjoy earning cash back and using credit strategically. If anything, I wish I had gotten a credit card sooner. I currently have two credit cards, one of which is fairly recent, and having both makes sense for my spending habits and financial goals.
Closing Message
Do you have a credit card? If so, do you like it? Would you get one again if you had the chance to start over? Whether you are actively looking for a credit card or simply deciding if one is right for you, make sure you carefully consider your financial goals and your level of monetary responsibility before applying. I recommend revisiting the audience section to see if you fit the profile. As always, have a wonderful holiday season and a great day.
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