Credit cards are good! Here's why

They are ubiquitous, and everyone from a fresh graduate to the CEO of a conglomerate is likely to have one. Ever heard the saying, cash is king? Maybe it’s time we changed it to “Plastic is King”. With the new adoption of this commonplace technology, most establishments have credit card readers to ease transactions between themselves.

                                                                              We are all using plastic, baby
However, many personal finance blogs and experts do not recommend using credit cards.
The reasons attributed to eschewing the cards are numerous, most of them centring on credit card debt. For good reason, as reported by Free Malaysia Today, some 47% of Malaysian youths have high credit card debts while 38% have taken personal loans.
These figures aren’t likely to come down anytime soon, and if one is not careful, those debts will soon lead a person to bankruptcy.
That being said, credit cards, if used responsibly, are a fantastic tool. From extra credit to free goodies, the lists are endless – provided of course you know what you are getting yourself into.
So, here are 5 reasons why a credit card is important

  1.     Your credit score depends on it

Banks and other financial institutions are risk-averse. They don’t provide loans to anyone who walks into a bank seeking a large sum for no reason. For this reason, credit cards can help you build a solid credit history.
With regular use and prompt repayment, a person can find himself an easier time seeking loans and additional credit such as increased credit lines, mortgages and consumer loans as opposed to someone with an unknown credit history. This is particularly important when a young person has just started working and is seeking to purchase their first home.

  1.   Bonuses (we all love bonuses!)

We all love free stuff, and a credit card does give out free stuff!
From free reward or discounted travel points to discounts offered at cafes and restaurants, even cashback bonuses, credit card companies reward those who use their cards for purchases. The possibilities are endless and most of us have certain preferences for the discounts we want.

     We all love free goodies darlings

Also, most credit cards also offer reward points, allowing you to obtain points for any purchase you make. Sometimes, those points would coincide with a promotion by certain companies that nets you double or triple the usual points.
When you reach a certain point threshold, you can redeem your points for gift cards or buy items outright from the credit card company’s online rewards catalogue.
Of course, the best rewards programme depends on your lifestyle and needs, so research carefully for the best deals before signing up.

  1.   Safety from fraud

Did you know that if your card has some fraudulent charges on it, you can dispute the charges with your bank?
As stated by Investopedia, when your credit card is used fraudulently, you aren’t out any money – you just notify your credit card company of the fraud and don’t pay for the transactions you didn’t make while the credit card company resolves the matter.

  1.   It’s accepted worldwide

Most credit cards are accepted worldwide. Some travellers may even eschew the inconvenience of exchanging their own currencies for local currencies in the country they are visiting.
Further, it is easier to rent a car or stay in a hotel room if you made a reservation with a credit card instead of cash payments as most hotels and services do not accept paper currencies.
This allows the hotel and services to charge customers for any damage they cause to a room or a car if they have damaged the car or room they rented. Also, foreign travellers might not always find themselves in a country that accepts their debit card.

  1.    Most importantly, it’s a source of emergency funds

Now some of us may argue that having credit cards is akin to spending money that we don’t actually have, but having a source of emergency funds to supplement funds that we don’t currently possess can be a lifesaver.
For real emergencies, a credit card is a good thing to have as opposed to payday or short term loans. On the occasion when your funds are limited and you find it difficult to pay off the imminent bill, having a credit line will give you and your family the money you need to survive the coming months.
Just remember to pay off your debt as soon as possible. Otherwise, you’ll end up in bigger trouble than you were before you swiped your card so cavalierly.

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