Having a credit card may be for you

Credit card headaches

Often times, we think credit card is extra money. Before even receiving our salaries, we have already planned out how to spend it down to the last cent. These vary from paying monthly bills and allocating allowance for our daily expenses to picturing us buying something that we wanted or have in our carts on shopping apps.

Having a credit card makes us spend now and pay it in the future, considering that we are planning on paying it. This adds up to our money allocations and sometimes, puts our budget at risk. Most of the time, we had already spent more than what we are going to earn. In effect, we adjust and most of the time, we do not pay the full balance of the credit card.

A lot of articles and blogs online will tell us to pay our credit cards in full because it creates a rolling interest month on month that makes the total amount to be paid higher than what we have used it for. This is good advice and there are also advice of strategies for those who can not pay in full.

Having a credit card is not having extra money. It is a passage to get a loan from the bank. A loan that you can use now to buy almost everything you want and pay for it sometime in the future. A lot of people think that having this plastic thing would make life more comfortable since they can buy what they need. In the end, if they do not have the money to pay for it, it only hunts them and takes away their good night sleep.

So, if a credit card can create these types of problems, why even use it? What benefit could we get from it if it would just cause headaches for us in the future? Why use it? Why even have it?

Benefits of credit card

I recently had a short conversation with someone who does not have a credit card and only uses a debit card for any transactions. This person mentioned that she does not want to have any debt to pay and rather use her own money. If she does not have any, or not enough, she would rather wait instead of taking a loan from a bank.

Good. That is really good. Her understanding of credit cards is very clear. It is not extra money. It is a loan. A loan that must be paid. If not paid, it will incur interest. That interest compounds and if the loan is not paid, eventually, the amount will be be higher than what is owed. It can also become twice as much.

However, there are also good things that can come out of having and using a credit card. And all of these could be capitalized if it is being paid regularly. Regularly means paid in full and not incurring interests. Below are some of the advantages:

• Physical security. The street could be a dangerous place depending on the neighborhood. Bringing cash could endanger your finances once someone mugs you. A credit card can be stolen but you can easily lock it by calling your bank safeguarding any expenses charged by any mugger. Having physical cash stolen is done deal. It can not be recovered, most of the time.
• Discounts. Some establishments offer as much as 50% discount on purchases if a certain credit card is used. This creates savings as instead of getting the full price, you can get it for a much lower one.
• Points for perks. Some credit cards offers a point system wherein you can earn point and exchange them for something else like plane tickets, grocery items, etc.
• Cashback. There are also credit cards that will return a percentage of the amount you purchased as cash. This means that you could use the cash to reduce the amount you need to pay. In effect, it is a discount too.
• Online purchases. Although this is a risky transaction, most international purchases require a credit card. With everything global now, this helps us reach commodities that were previously hard to get.

Some of these items can be provided by debit card (like physical security and online purchases) however, a lot of advantages are unique to create a credit cards.

A tool, not extra money

But, a credit card is not extra money. That needs to be established and understood prior to getting it and using it. It is a loan that needs to be paid. It is asking the bank to let you use their money now and pay it back in a future time.

A credit card is a tool. It is a means for us to purchase what we need and want. It makes it a little easier. It makes certain things reachable.

Since it is a tool, it only becomes bad depending on how we use it. If we keep using it without any money to pay for the loan, then that is misused. If we keep using it and paying only the minimum balance, it will include interest. It only means we do not have the money to pay for it. So why use it?

Use a credit card only if you have the money. You’ll see a lot of that message in any articles and blogs online. If you do not have the money to pay for it, do not even think of using it.

Use it to make your life better not worse. It is a tool for us to use to have some comfort in life. If you think it is the solution to a problem, then you are mistaken. Use it to your advantage. Use the benefits. Let it help you make things better instead of losing a good night’s sleep.

A credit card is not extra money; it’s a loan from the bank that must be repaid. It should be used as a financial tool to make purchases more convenient and accessible, not as a means to spend money you don’t have. Misusing it by only paying the minimum balance or using it without the means to repay can lead to debt and interest accumulation. The key is to use a credit card responsibly—only if you have the funds to cover your expenses—to improve your life and enjoy its benefits without financial stress.