The credit card has a poor reputation and while and is seen by some people as something almost evil. In reality it is just a piece of plastic and the person that has the credit card has control of how and when it is used. When you use a credit card wisely then it has many benefits that you can take advantage of to add convenience to your life and to always have source of simple to access credit available in emergencies. Used unwisely credit cards can become a financial millstone that drags down our ability to plan for the future.
We have compiled some reasons to use a credit card and some reasons that you might stay away from a credit card. You can read through them and honestly look at yourself and your financial situation and then decide if you should use a credit card or avoid them to put yourself on the right footing to have a better financial future.
Reasons to Avoid Using a Credit Card
Here we have compiled some reasons why you might consider a credit card is not the best thing for your financial future. It is important to be honest with yourself so that you can make the right decision.
- Do not budget and tend to spend when you have money and go without finances are tight.
- Do not take your finances seriously and are happy to live from paycheck to paycheck.
- Will purchase things spontaneously without considering the longer term.
- Cannot commit to paying any credit card balances off by the end of the month.
The facts are that if you cannot take control of your spending and budget wisely, a credit card can become a burden because it allows you to buy things now and pay for them in the future. This makes it very easy to rack up large amounts of debt that then attract a high interest rate.
It is not uncommon for people that have credit cards to be completely unaware of how much they owe until they receive their monthly statement. Even then the most highlighted figure on most credit card bills is the minimum monthly payment. This amount is the minimum that you can pay and people naturally pay this amount. This is also the amount that is most advantageous to the credit card company because it keeps the debt earning the highest amount of interest for the longest time.
Reasons to Consider Using a Credit Card
- Builds a credit history.
- Tracks spending and allows you to look through your purchases making budgeting easier.
- Has protection if it is lost or stolen unlike cash.
- Is convenient to use.
- May have special insurance, discount or bonus offers.
- May offer extended warranties on purchased items.
- May have a rewards program that uses points or cash back on purchases.
- Allows you to charge back fraudulent, not received or not as described purchases.
The credit card is a tool and just like a hammer when used responsibly and wisely a credit card can help you build a strong financial future. Credit is a vital part of many people’s lives and having a good credit history can help to reduce borrowing costs when we are looking to buy a house or a car. This means keeping our credit file clean with no missed payments, no late charges and a strong record of paying back debt. Using a credit card and paying it off monthly allows you to make a single payment for all of your purchases and builds up this positive credit history.
When you use a credit card each purchase is recorded and is immediately available online. You can track your purchases and payments and see that you are staying within your budget. Unlike cash if your credit card is lost or stolen you can easily get a new card quickly without losing anything. Carrying large amounts of cash can be a nerve racking experience and with a credit card it gives you secure access to your funds without having to make yourself a target for robbery.
You can use a credit card just about anywhere today from a convenience store to a gas station and a restaurant to a grocery store. A quick swipe and the payment is made and by selecting the best credit card offer you can be rewarded for every purchase you make. There are cash back offers and point systems that allow you to earn simply by using your card.
Other cards have benefits such as extended warranties and insurance that covers certain purchases adding value. These are all great reasons to use a card if you were going to make the purchase anyway. The seller is paying a small fee for using the credit card system and you can take advantage of the financial institutions wanting you to use a credit card by maximizing the benefits and paying them off before interest is charged.