#adulting – How having Credit Cards can be Beneficial
We often are told to avoid credit cards in our adulting journey. They are portrayed as capitalistic money-sucking scams created by banks. Run far unless you have a death wish or want to be entangled in a mountain of debt! However, this could not be farther away from the truth. If used responsibly, credit cards can bring about a wealth of benefits. Not quite sure how to use credit cards to your advantage? Read on to find out more.
Why A Credit Card Is Key In Your Adulting Journey
Practise Discipline In Spending
While using credit cards may be borrowing from the bank, you can set the credit limit! First, create discipline and stop spending beyond your allocated budget with a credit card. Set the credit limit to match your budget. By adhering to the limit and paying in full by due date, credit cards will not plunge you into debt!
Get Rewarded For Spending
Unlike a debit card, credit cards offer a suite of benefits for spending. This includes rebates, air miles, or merchant points. Beyond using credit cards to build discipline, utilise them next to stretch your spending. Get extra perks on expenses that we would incur anyway! In addition, some credit cards offer interest-free plans that make big-ticket purchases more affordable. Particularly, this is useful for young adults beginning adulting with many short term financial goals to achieve. With interest-free instalment plans, you get to own the item without dishing out a huge chunk of your pay check at one go for it.
Build Your Credit Score
Thirdly, a credit score is a grade of how trustworthy you are with money. Consequently, banks use this to determine how much they will lend you, and the terms of that loan. If you are looking to buy your first home, own a car, or purchase big-ticket items, the likelihood of you needing a bank loan is extremely high. Therefore, to get more attractive terms, you would need a good credit score. Credit card spending with on-time repayment is an easy and effective way to get started.
Are Credit Cards Right For Me?
Owning a credit card itself will not help you develop good spending habits. In that regard, credit cards are only beneficial in the hands of people who already have good spending habits. If you think that a credit card is a right fit for you, it’s time to take the next step to start building your credit score, earn while spending, and increase your spending discipline with one.
We hope this article has given you some food for thought on the value of credit cards and provided some insights if you’re considering applying for one! Prefer not to have a credit card, but still want to take advantage of borrowing? Check out our article on Buy Now Pay Later. At the end of the day, remember that there is no one-size-fits-all solution.