Many Filipinos still have some reservations about credit cards. This is partly because of anecdotes from friends and family members, whose cards have been used for fraud or whose bills keep piling up with no end in sight. These concerns are definitely true, but they don’t show the whole picture. In fact, for many credit card owners, having one is definitely more of an advantage than a disadvantage.
If you still need some convincing, here are some benefits that you can enjoy with a credit card:
You Can Earn Points and Other Rewards
Banks and credit card companies have a lot of partner merchants where you can use your card to earn points and other rewards. If you’re a foodie, there are cards that allow you to earn more points when you eat out or have meals delivered. If you drive often, whether for work or pleasure, some credit cards have tie-ups with fuel companies so you can enjoy lower prices whenever you gas up. There are even co-branded cards with supermarkets and airline companies, so you can earn more points and rewards when you use them at specific establishments.
The key is to find the card that matches your spending habits the best. This way, you can maximize your card’s usage and get rewarded for purchases that you’ll make.
You Can Use It to Build Your Credit History
Having a good credit history and credit score is helpful when you’re trying to get approved for loans. A credit card is quite helpful in this regard, because it raises your purchasing power while at the same time reduces your credit utilization ratio. In short, having a credit card means you have available resources and that you aren’t using up all of those resources at the same time (provided that your credit card isn’t maxed out). This is something that banks and financial institutions like in a customer.
If you don’t have any credit history yet, getting a credit card can help you build one. Start small and use your card responsibly. Pretty soon, you’ll gain a high credit score that leads to perks such as faster loan approvals.
A Credit Card Is More Secure
Both debit cards and credit cards are convenient when it comes to making purchases, whether online or in-store. At the same time, these two cards also share similar risks; in particular, a debit card can be as vulnerable to cyber attacks as credit cards. The difference is that with a credit card, you aren’t using your own money at the outset. If there are any fraudulent transactions, you can get in touch with your bank and have the charges reversed.
The same can’t be said about a debit card since it’s directly tied to your bank account. If a hacker empties your account, you’ll have a more difficult time getting your money back.
(Don’t let this fact scare you, however! The key is to practice good cybersecurity habits so you can minimize risks for all your banking accounts.)
You Can Spread Out the Cost of Big Purchases
Buying in cash has a lot of advantages, including bigger discounts. However, big-ticket purchases like a TV or air conditioner can put a huge dent in your pockets and there are times when you can’t afford to stretch your budget too thin. In this case, using a credit card is extremely helpful. By dividing your payments into multiple installments, you don’t have to shell out a huge amount all at once. Thus, you’ll have more room to juggle your finances.
Besides, there are also certain perks when you make big purchases using your credit card. These include 0% installment promos, longer warranty periods, and other freebies either from the card company, the merchant, or both.
It Can Help You Become a More Responsible Spender
While there are indeed plenty of “horror stories” about people who used their credit cards to the point of insurmountable debt, these aren’t universal experiences. Ultimately, it still boils down to you and how you use your card. If you use it for all your purchases but don’t pay on time or only pay the minimum balance, then you definitely will end up with a mountain of bills.
Meanwhile, if you maintain self-control and practice good usage habits, your credit card can actually transform you into a responsible spender. Some of these good usage habits include:
- keeping your credit card spending under 30% of the credit limit
- not using your credit card for impulse buys
- paying your credit card bill in full and on time
- if you aren’t able to pay in full, paying more than the minimum amount due
- monitoring your credit card statement to check if there are any suspicious transactions
As you can see, a credit card offers plenty of benefits—including building your character when it comes to money. If you want to become more financially capable and responsible, getting a credit card may be a good idea. There are plenty of options, including those with low credit limits so you can test the waters first so to speak.
Ultimately, you can think of a credit card as a tool. In the hands of a responsible wielder, it can create plenty of opportunities and deliver good results!