Top 4 Reasons Why You Need a Credit Card
The world is slowly shifting to a cashless way of paying for purchases. There’s the use of debit cards, and of course, credit cards.
Some people are quite apprehensive about using credit cards for their transactions. Some think that these cards are synonymous with debts piling up.
Well, we’re not going to lie about it. Bad (and irresponsible) credit card use will really lead you to financial woes.
But, let’s now focus on the reasons why using a credit card is a good idea.
1. Helps Build Credit
Responsible use of your credit card helps you to build credit. Why is building credit important, you may ask?
A good credit score can help you get a mortgage loan. Mortgage lenders would look at your payment history and may decide from there if you can keep up with a bigger loan such as financing a property.
Not on the lookout for a house yet? You may be interested to know that good credit can also help you with your apartment application.
The same goes when you are contemplating buying a car or starting your business. Lenders will always look at a good credit score.
With the simple act of using a credit card responsibly, you can be on your way to building a good credit history to help you achieve some of your life goals.
2. Lets You Enjoy Rewards
Credit cards come with the perks of earning points. For every purchase you have, for example, in buying your favorite cup of coffee, groceries, or furniture, you get to add to your points.
When these points accumulate, you can start redeeming your rewards. These rewards may come in the form of discounts for travel, hotels, or merchandise.
This rewards option is something that isn’t possible when you pay with cash, cheques, or even with most debit cards.
3. Provides Financial Cushion
A credit card isn’t something that will let you have your way to having a frivolous lifestyle. You must have a mind shift if you see your credit card as an unlimited pass to buying anything you fancy.
Instead, think of it as an alternative to an emergency fund (if you haven’t built one yet). When your air conditioning unit breaks and it suddenly needs repair, you can use your credit card rather than suffer in the sweltering heat.
The same goes when your car figures in an accident and needs the service of a reputable auto body shop. You may get in a jam when you don’t have the necessary funds to finance the repairs.
You can either get a loan from friends or resign to the fact that you have to commute for a while. Or, you can use your credit card to get your car back on the road as soon as possible.
4. Protects You From Fraud
Think of this scenario. Your debit card or its vital details gets stolen and a fraudulent transaction has been made in an expensive spa at a well-known hotel.
The nature of a debit card is to instantly deduct from your account the money used for any transactions. Thus, going back to the given scenario, your money is as good as gone.
However, when your credit card or its vital details get stolen and used on the same transaction stated above, you can report to your credit card company and not pay anything. Thus, your money is still safe.
The bottom line is using a credit card comes with many advantages. You just have to be equipped with sound financial literacy and planning to make it work.
Do you have more reasons why you think using a credit card is a good idea? We would love to hear your thoughts.
Managing one’s finances is a life skill that everyone should learn. Here are some more information to help you get on track with your money.