Owning a Credit Card - should we avoid them entirely?

Definition of 'Credit Card'

A standard-size plastic card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. It is a plastic token that are a convinient subsitute for cash/cheque transactions as part of the essential electronic components.

Many tend to believe Credit card is a means to an end in their financing due because often users spend recklessly out of the experience of convenience and satisfaction the card allows and ended up with a debt at the end of the month. However this is like avoiding power tools because they are more dangerous.

A Powerful Financial Tool

Credit cards will not help you achieve financial freedom, nor will they send you to financial hell. A credit card is simply a financial tool that must be used with care. There are pluses and minuses to consider, and when used responsibly credit cards can make your life easier.

Benefits of Using Credit Cards

• You can make transactions without on available platforms that can't be done with cash/cheque — e.g., online purchases
• The convenience and ease & fast transactions as well as automations — e.g., automatic bill payments, etc.
• You get to enjoy cash back bonuses and reward points that certain credit cards offer.
• It’s easier for you to keep track of your purchases.
• It’s safer than carrying around physical cash.
• You are better protected against fraudulent purchases and you can often get your money back.
• You won't loose your money for loosing your credit card (provided you cancel the card from the bank before falling to other people's hand)

Additionally, there are other benefits depending on the specific card that you use such as Low to No interest rates/discount on physical purchases/ rewards points & complimentary benefits

A Few Reasons Why You Should NOT Use Credit Cards

• You are easily swayed for impulse buying and spend more.
• Racking up a big amount of debt at the end of the month without noticing it.
• If you do not pay your balances in full, you could end up paying a lot of finance charges.
• You could be hit with expensive fees — e.g., late fees, annual fees, etc.
• Irresponsible use of credit cards could wreck your credit scores.

So owning a credit card is a very subjective manner, it has its fair share of benefits as well as its weaknesses. However one should not disclose credit card as a plastic that would plunge you into financial hell. Like any tools, its up to the owner how it is being used and not to fear the tools itself.

Those who are considering to apply for credit card for the first time, don't miss out and read the "5 tips for Choosing Your First Credit Card" to get the most out of your credit card experiences.

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