The truth is credit cards are not all evil, instead, how a person use it that makes it bad. Usually, credit cards becomes a problem when a person has weak emotional attitudes and habits, such as too much materialism, lack of self-control and discipline, as well as financial illiteracy or inability to effectively manage personal money and finances.
Personally, I used to regard credit cards as evil plastics. I always immediately turn down any offer of availing one. But this year I finally open my doors into getting one credit card. And for the past couple of months I held and used the card, I’ve proved that credit cards were not purely evil plastics after all. In fact, it has been useful for a number of reasons, and that’s what I’ll enumerate below here.
10 Benefits of Credit Card
Here are the top reasons I find it beneficial to have a credit card on hand.
The first benefit of credit card I’ve noticed was convenience. For an instance, I went to the mall and was about to withdraw money from the ATM machine. But the line was too long and I didn’t have the time to wait. By having a credit card on hand, I did not have to wait in the long line at the ATM machine, thus, it saved me time. Also, when you need large amount of money, if you use your credit card, you don’t need to carry the large cash around and worry on the risk of getting rob.
2. Delay Use of Cash
The next benefit of credit card is you can delay using your money. In financial term, there is what we call time value of money. When you delay cash outlay, you can still earn while you’re holding the money, like interest in the bank or you can invest and grow it on other financial instruments. In normal scenario, it means you have ready cash to use for other really important spending or emergency.
Another benefit of credit card is having discount privileges. Certain credit card companies have discount perks on certain stores or business establishments. So it saves you money when you use credit cards in these establishments. For an instance, when we buy tools from a certain hardware store, we get 5% discount when we use a credit unlike when we buy on cash, there’s no discount given.
The next benefit of credit card is rebates. There is certain credit card that provides rebates when you use it for your purchases. It is like discount but the difference is that you get the deduction on your monthly bills not on outright purchase. The rate of rebates depends on the credit card company.
5. Other Freebies
Another benefit of credit card is receiving perks or freebies. Like free material things or even free air fare tickets. Usually the criteria are based on the points you accumulate. A certain amount of currency is equal to one point. The first time I’ve used my credit card, I’ve received gift certificates and free beauty products after I got and paid the bill.
6. Increase Credit Rating
A credit rating means the credit worthiness of an individual or corporation. Simply put, it’s the basis used by banks or credit institution when they are evaluating you when you avail loans, such as car, real property, business or cash emergency. A person who uses credit cards is likely to be given loans faster compared to those that don’t.
7. Emergency Cash
Another benefit of credit card is for emergency purposes. When you are in need of cash and you have nowhere else to run to for money. Depending on your credit limit, credit cards provide cash advances. However, keep in mind that this is for emergency or worst case scenario instances. Not having money to book an airfare ticket for leisure is not considered emergency.
8. Develops Self-Control and Discipline
The non-monetary benefit of credit card is it develops you to become responsible. It teaches you to have self-control and discipline by constantly resisting the temptation to use it beyond what you can afford.
9. Trains You to Money Management
Another non-monetary benefit of credit card is it helps you develop money management system. As discussed in Personal Finance 103: Money Management Tips, you can set up what we call credit card funds which is used to pay off all your credit card bills. Just ensure you don’t spend beyond the amount of fund.
10. Buy Things Online
Last but not least benefit of credit card is you can buy things online or in the Internet. It’s similar to convenience. It saves you time and energy if you can pay things in just a click of a button.
By now, you already understand why credit card is also beneficial; it’s not all evil and bad. The important thing to remember is to learn how to manage it and use it for your benefit rather than be trapped by financial problems because of your own lack of self-control and discipline.
Control your credit cards and don’t let it control you.
If you think you don’t have such discipline and self-control, it’s best for you to totally avoid availing credit cards. Only use one when you are sure you can manage and control it. Credit cards can only be beneficial to those who can control it. But it can be the worst nightmare for those who lack discipline and self-control.
For a final note, always keep this in mind:
The problem is not how much we earn, it’s how much we spend. If you want to be free from financial worry, don’t spend close or beyond what you can earn. It’s the very first step to financial freedom.
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