Has anyone ever told you about the benefits of using “debt to counter debt”? Has anyone ever advised you to “borrow” in order to ensure that you don’t fall back on payments of bills and monthly installments? Has anyone ever asked you to get a credit card to improve your credit score which can, in a way, help you improve your financial health?
If you think that we’re being incongruous and silly, wait till we explain. Cards may not be so bad!
Have You Been Told That Credit Cards Are a Bane for the Modern Society? Well, It May Not Be True After All!
While some have the right to feel peeved with cards since they can often be the fastest way to run up massive debt, if not used with caution, they also offer a number of conveniences that cash can’t offer. Although cash is often seen as the best option in a well-heeled household, it may also mean that members of these households are losing out on the chance to improve their purchasing power and time-value-of-money factor.
Here are some of the most logical reasons why you should be using cards, albeit with care:
Reason 1: If you buy something with cash, you don’t get to make your money work. It simply leaves your pocket or bank account and never returns. If you make a purchase on credit, however, you get to buy the item immediately but pay for it only when the next card bill becomes due.
So, within this period, your money, which you would have otherwise used for paying your card bill, can work and earn you interest from a savings scheme, a stock, or a bond. Billing cycles may vary from card to card but are usually no less than 1 month. That should be enough time to earn a good return on your investment and use a portion of it to offset your card bill.
Reason 2: Most cards offer rewards. Cash doesn’t! Get the right shopping card and you can earn rewards points, vouchers, rebates, and discounts. Or, a good travel card will give miles that make your air travel cheaper. Not to forget, other benefits such as complimentary travel insurance or replacement within 48 hours if you were to lose your card while on a tour.
Even the wealthiest of the wealthy don’t always get to lead the life that you can live if you have a premium card in your wallet. So, cards aren’t always bad, are they?
Reason 3: You may not always enjoy the convenience that cards offer, with cash. It may not always be feasible to carry paper bills if the amount is very large. But, with a card, you can purchase or make payments of thousands, without having to physically carry paper bills. If cards with high credit limits were such a menace, they wouldn’t fit into your tiny wallet, would they? Just kidding!
Reason 4: Cards always leave an electronic trail which makes it easier for you to audit your spends and take stock of your finances on a real-time basis. Plus, you also get a statement at the end of the month or you can simply log into your internet banking account and pull out the latest data. That means you can easily assess whether you’re staying on course with your budget goals or not. It’s usually far more difficult to keep track of cash spends.
Reason 5: Most card issuers around the world offer theft protection benefits. That means, you won’t be held accountable for unauthorised transactions, once you have informed your bank, or your accountability will be limited to a reasonably small amount. Can you say the same about cash? Once stolen or misplaced, it’s usually gone forever and retrieving it is close to impossible.
Reason 6: Don’t have a credit history? A card is the fastest way to build one. Make on-time payments and if possible full payments at the end of every billing cycle, and you can have a great score in a short span of time. If you’re thinking why it’s important, ask any financial expert or your neighbour and they’ll all tell you that you need a good score if you’re planning to take a mortgage loan or trying to land a job.
Reason 7: Would you complain if you had purchase protection? Many card issuers offer protection for your retail transactions or online purchases. If something were to go wrong, you might get a full refund. No paper bill will ever offer you this benefit.
Want one more reason? Here is a bonus one:
Reason 8: At times of financial emergencies, you can easily withdraw money using your card at a nearby ATM. If you’re solely reliant on cash and leave your home, one day, without your wallet, you can well imagine the problems that you might have to encounter.
Life isn’t a bed of roses. We’re not implying that it is. But, aren’t we all trying to reduce our hardships and make our lives a little easier? You need tools to make life more comfortable.
A credit card is such a tool. In fact, it may be the seventh Infinity Stone that was never shown in any of the Avengers’ movies – it gives you control over your finances!
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