For the traditional guy, credit cards could be the mother of all financial evil. It is because of this rectangle piece of bendable plastic that gets people into debt, lose their assets, and cause family problems so deep that it leaves relationship cracks that can never be mended.
And if you are such a person, maybe it’s time to get over that generalization.
Credit cards have been around of ages and they don’t look like going out of fashion anytime soon. This staying power they have is not due to a radical obsession Americans have with broken families. It is because of the actual real benefits that they provide consumers on a day-to-day basis.
Yes we tend to instinctively blame these magnetic-stripped cards the moment we learn about someone who is deeply in debt. But still, you don’t see yourself canceling your cards because of the plight of others do you?
In the words of what an army officer might say, “It’s not the tanks that are dangerous. Look at how innocent they are parked right there. It’s the soldiers operating the military vehicles that make them dangerous.”
Still don’t think there are any advantages that come with credit cards? Here are 4 big benefits that we don’t give it enough credit for.
1) Record keeping
We talk about the convenience of paying for transactions with cards very often. But the one thing that we often fail to acknowledge is the detailed statement of our expenses we receive in the mail each month. I actually look forward to getting it so that I can review my expenses for the month.
Imagine if you are a cash person. Can you see yourself meticulously recoding down every dollar you spent for the month down to the very penny? I guess not.
Provided you are not a credit monster who chumps down your credit line like cookies, it is a great way to manage a household budget. Internet banking has even made this feature better by allowing your to review your purchases on a real time basis. That’s like a full time personal accountant working for your household.
When I was still a young adult, I never fully appreciated the security features that come with credit cards until I was scammed out of $500 on one fateful day. When I realized and accepted that I was dealing with a con-artist, I actually thought that my money was gone for good.
But a colleague of mine just casually told me to report it to the card issuer and request for a chargeback. That’s what I did. The funds were immediately deposited back into my account as a temporary debit pending investigations. And without any fuss, they ruled in my favor. The scammer was swatted away like a fly. The ease of how all these went about left a deep impression on me about how serious bankers and lenders are at protecting their customers.
If what you’ve lost was cash, it’s gone. You will never see them again. Period.
But when we are talking about charges on credit cards, you can almost certainly always get your money back for fraudulent charges.
3) Improve credit score
You won’t know how big an impact your credit score can have on your life until the day you find that every bank is not returning your calls for some strange reason.
A credit score is a scoring system that helps lenders assess and judge how safe a borrower you are.
A good score can mean easier loan approvals, higher loan quantums, and lower interest rates. While adverse credit can mean the opposite of those.
To build up your credit score, you need to have a borrowing and payment trail that shows credit analyst that you are a good boy when it comes to paying back your creditors. And the most basic item that leaves this trail is your credit card.
A regular person can build a very good credit history by just using credit cards and repaying them in full at the end of each month. You want to plan for good credit in advance when you foresee that you could be taking on a big loan in the near future, like a mortgage.
4) Rewards – the good stuff
We are going to spend money everyday anyway. So why not swipe those transactions and let those spendings pay you back in some form?
Credit cards these days comes with a variety of loyalty programs that offers the user freebies like cash rebates, restaurant coupons, bookstore vouchers, luxury hotel stays, vacation rentals, etc.
Nothing beats the fun of picking out a huge selection of products and services that you don’t have to pay for.