In a world that is increasingly becoming more focused on improving our financial discipline, it is possible that credit cards have been labeled, directly or indirectly, as ‘bad’. You know, ‘avoid credit’ seems to be the mantra for most. We are taught to budget, cut cost, save, invest and avoid all forms of credit. This makes credit cards almost an illegal possession for those pursuing financial discipline. But it needs not be. Credit cards are actually a tool for the truly financially disciplined people out there. They offer so much value if you can tame yourself. Here is why;
- Emergencies – Credit cards come in handy during emergencies. None of us is a fortune teller. We cannot predict the future meaning that we cannot plan for it. You might argue that insurance and budgeting for emergencies can help mitigate the effect but they can only do so much. Emergencies leave a hole in your finances that the good old credit cards can fill.
- Convenience – Credit cards offer convenience. That’s pretty much straight forward. Who wants to walk around with a stack of cash? Definitely not you. Sometimes, you don’t even have that stack of cash to walk with. Walking with a credit card makes you feel, and rightly so, like you have one.
- Buy what was not in your budget that month – Now that you have a budget, you need to stick to one, right? Yes you do. But what happens when you need to buy something that might be limited edition? If you don’t have extra money, credit cards happen.
- Love Travelling? – Who doesn’t? For those who love travelling abroad, a credit card is a must have. They don’t use our currency out there and you will need to make transactions. A credit card saves you the worry and hustle of changing currencies to the local one.
- Travel insurance – You will most definitely need a travel insurance when travelling abroad. Having a good credit card allows you to get discounted rates on travel Insurance.
- Discounts – Saving never did anybody any wrong. A good discount will ease off pressure on your budget. A good credit card usually comes with discounts at selected outlets. That debunks the myth that credit cards are bad for the savings culture.
- Reward points – Generally speaking, spending is not a very good financial habit. But it has it perks. Having a credit card helps you reap the reward, quite literally, for spending. Get reward points and redeem them for something valuable later.
- Credit cards operate on a revolving debt concept – Credit cards leave you with debt, granted, but unlike other types of debt, they are revolving debts. This basically means that you don’t have to borrow a huge amount of money and pay all of it later with no ability to take up another debt before you clear the first. With credit cards, you can accrue a small debt, pay off part of it, take up another, clear all of it, take up another… The choice is yours. That has been showed to help get rid of bad credit and inculcate good credit.
- Credit score – Due to the fact that credit cards are revolving debt, they help you maintain a good credit score. That boost your chances the next time you walk into a bank looking for a loan.
The only trick to using your credit card to your benefit is spending on what you can afford. Credit cards are not a license to live beyond your means or abandon financial discipline.
Credit cards are like superheroes, right there when you need them. So, do you need a superhero? We have one waiting for you at http://bit.ly/17ghPCy. Credit cards actually do more good than harm. Still convinced they are evil? Fair enough. Make that a necessary evil.
Chase Bank Kenya, Chase Cards, Credit Cards