Let’s be honest. Credit cards are unnecessary, but it would certainly make your life easier if you have one. Why get a credit card? Here are 7 compelling reasons.
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Compelling Reasons to Get a Credit Card
Some people despise credit cards. It could be due to their negative experiences or stories they’ve heard. Now I’ll give you compelling reasons why you should get a credit card.
1. Leverage
No capital? No problem!
This is the single best reason why I needed a credit card. A credit card is an excellent way of using debt as capital for your business venture.
When I started online marketing and freelancing, my credit card was my savior for all the tools I needed to pay to kick off any project.
Some of the bills I need to pay for my projects are things like computer hardware, domain name, web hosting, WordPress plugins, themes, online tools, VPN, and paid subscriptions. PayPal wasn’t an option; they have no mercy on charging ridiculous fees.
As long as you pay the credit card amount due in time, you don’t pay for interest charges, and there shouldn’t be any problem.
2. Improve your credit rating
Someone’s watching your credit history, so make sure it looks good!
The Credit Information Corporation (CIC) in the Philippines is tasked to receive and collect basic credit data from financial institutions and provide access to every borrower’s credit history and financial condition.
The CIC provides credit reports, which summarize borrowers’ financial transactions. Each borrower has a credit rating from 300-850, the higher the better.
So what does this all mean? When you apply for a loan (i.e. online loans, housing loan, car loan, business loan, personal loan, etc.) or utility subscriptions (i.e. postpaid plan, internet, cable TV, etc), banks/creditors can access (with your permission) your credit history thru the CIC.
The creditor’s decision to approve your loan/utility subscription depends on how good you are as a borrower. Is your credit rating 380? 650? 700?
Are you paying your house amortizations on time? Do you have an outstanding balance with your postpaid plan? Have you paid out your car loan? These questions can all be traced back by the creditors through the CIC.
Credit cards are just one of the ways you could establish your good credit standing by paying your credit card bills on time and that you’re capable of managing your debt properly.
3. Online purchases
Some local merchants accept online payments through E-wallets like GCash, ShopeePay, or PayMaya. However, other local/international merchants don’t have this option. This is when credit cards come in handy.
You can pay any transaction in a breeze with just a credit card.
4. Emergency Money
Imagine this. A typhoon is about to hit your town and you need to buy groceries in the supermarket for the family. But all of a sudden, there’s a power outage. And you couldn’t withdraw cash thru the ATM. Sounds familiar? Credit cards will come to the rescue!
Additional tip: Did you know that you could also use your credit card to borrow cash? Yes, it’s possible with the Cash Advance feature. Although you pay for interest charges, you can withdraw cash with your credit card through the ATM for emergency purposes.
Most credit cards offer this feature as long as your cash advance amount is within your credit limit.
5. Rewards
Want a new iPad or microwave oven? How about a round trip ticket to Bali for FREE?
This is one of the exciting features of credit cards – rewards! Most credit cards have this built-in feature where you can earn points for every penny you spend using your credit card.
When you have accumulated points, you can convert them with travel miles, gadgets, vouchers, and cash back. Exciting, right?
6. Security & Protection
When you pay cash thru e-wallets, but the seller doesn’t deliver the goods as promised, you are out of luck.
Yes, you can go to the seller and ask for a refund, but that involves time and money.
On the other hand, if you pay through a credit card and the seller scammed you, there’s a good chance that you can recover your payment.
You can call the credit card issuer (your bank) and file a dispute for a specific charge. The credit card company will investigate and issue a chargeback if your claim is verified.
7. Convenience When Traveling
You’re never safe traveling with large amounts of cash in your pocket. The risk of getting robbed and the chance of recovering them seems impossible and irreversible.
Instead, why not carry enough cash and just use a credit card?
From booking your accommodations to airline tickets, credit card offers convenience when you’re traveling within the country or abroad. And sometimes, the currency exchange is better than withdrawing cash through the ATM.
Final Thoughts
Credit Cards are like Swiss Army knives. You can use it for all types of financial transactions. Sure, anyone can live without it, but it offers a way better solution than cash in certain situations. For first-timers, I’d say you’d never know you want it until you experience the benefits.
But be cautious; you should never use your credit cards for whatever you want. Use your credit cards responsibly, or else it will bury you alive. Now that you’re already convinced to get a credit card, it’s time to apply for your first credit card!
