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Is a credit card really right for you?

Updated 18 Sep 2017 – By Loanstreet


Almost everyone you know now has a credit card (or two, or more!), so it’s no surprise you’re tempted to jump on the bandwagon. But this begs the question: should you really have one too?

If the following list of reasons why you should get one rings “Now this would help!” in your head as you read, then the answer you’re looking for would be a ‘yes’.

1) Build your credit rating

Looking to build up your credit score but don’t know where to start? Start with a credit card, as it helps you increase your credit-worthiness when you pay for your bills in a timely manner. Keep the transactions to a bare minimum, which is to say that you shouldn’t be swiping for anything that you wouldn’t pay for in cash.

One way to minimise chances of overspending would be to place repetitive payments onto your card, such as your gym membership and postpaid phone plan. This way you’ll have regular transactions while at the same time not creating a strain on your cash flow.

2) Increase purchasing powers

A standard credit card will normally give you a credit limit which is double that of your monthly salary. It helps you to purchase an item which you normally wouldn’t be able to afford. For example, you can purchase certain goods on an installment plan (such as a new television) and not fret about having to save for months before you could get it.

3) Buffer for emergencies

We never know when something untoward will happen. A credit card can actually save you from an unpleasant situation so that you can avoid the problems that come in an urgent financial situation. Let’s say your car were to break down and leave you stranded; the amount to pay for a tow truck and subsequent vehicle repairs will set you back a few hundred Ringgit.

Even if you can’t use the credit card itself to pay, you can still get a cash advance from it. This is actually similar to a short-term loan, where you get cash against your credit card, up to a specified amount. All you’d need to do is go to an ATM or bank and use your credit card (not debit card) to withdraw cash.

4) Balance transfers

This is a great way to save you some money. It allows you to transfer your existing debt (with a high interest rate) to your credit card which may actually have a lower interest rate. If you decide to pay off the entire amount before the grace period* ends, you don’t have to pay any interest. On top of that, you could collect points or earn rewards. Now who says you can’t have your cake and eat it?

*A grace period is a period where no interest will be charged on your credit card for purchases and bills. If utilised wisely, that piece of plastic can help you buy some time without being charged for it.

5) Convenience of use

You would only need to bring your card along and swipe it when you use it. There’s no need to get cash from a bank or ATM anymore, in addition to not having to worry about carrying a large sum of money on yourself, which is dangerous in itself. It’s easy to carry around plus you can even use it online and overseas without the hassle of exchange currencies.

6) Easy payments

A credit card bill will come itemised and detailed with the transactions you’ve made so that you can easily keep track of your expenses for that particular month. All you’d have to do is pay off the outstanding balance with a few simple clicks online. You could also pay all your monthly commitments through auto-debit to save yourself the trouble of paying them one-by-one every month.

7) Peace of mind

Once your wallet is stolen or has gone missing, the cash you have inside will be gone in a blink of an eye. However, with a credit card, you would just have to call your issuer and let them know it is missing so that it will be immediately cancelled, thus saving you from the headache of having to deal with mysterious things that you didn’t purchase.

8) Signup bonuses

It's no secret that credit card companies like to entice potential customers with the promise of a free gift which you can easily get, just by signing up with them. Most often, these gifts are pretty useful and practical. So why not sign up and receive it? If you find yourself not needing the credit card, a simple phone call to the issuing bank is all it takes to cancel the card. 

To conclude

To sum it all up, a credit card would make your life easier based on the reasons above. There are also many reasons why you shouldn’t get a credit card. But that's a story for another time! If you are of the personal opinion that getting one is going to make your life easier and you have control over your spending habits, then sign up for a credit card of your choice.

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