Why do more and more people choose to use a credit card?

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There’s the latest smartphone out of the famous brand. You really wanted to get it because you have been wanting it for years. However, you cannot afford to buy the smartphone and pay its full price because it’s expensive, your money is not enough. Luckily, you found out that the store accepts credit.
Why do more and more people choose to use a credit card? 1

There’s the latest smartphone out of the famous brand. You really wanted to get it because you have been wanting it for years. However, you cannot afford to buy the smartphone and pay its full price because it’s expensive, your money is not enough. Luckily, you found out that the store accepts credit. So, you thought of getting a credit card to buy the smartphone that you want. You eagerly apply for a credit card application from a designated bank. After several days of waiting for your credit application, you finally had your credit card (Yey!). You can finally buy your dreamed smartphone. Now, you have your dreamed smartphone at your hands, but you are in debt. You wondered how will you be able to pay your debt before the due date to avoid a higher interest rate. According to Bankrate, it takes months or years to pay your debt for buying unnecessary expenses using your credit card. It is good to reward ourselves for the things that we wanted, such as having the latest gadgets, expensive clothes and shoes, and eat at a fancy restaurant. Nevertheless, it is not good to achieve those things using your credit card because in return you will be in a situation of bad debt. You thought that having that unnecessary stuff is an emergency and experiencing you only live once (YOLO) life using your credit is not a good idea. Perhaps, it will worsen your financial situation. If you cannot afford to buy it and you think it is unnecessary, then do not buy it. Having a credit card is not bad if you can afford to pay your debt on time, it is bad when you cannot afford to pay your credit on the due date. Late payment of credit can have a higher interest rate and charges, in result, you will pay a bigger amount. The bigger the amount you will pay, the more you are stressed-out.

 Credit cards have a minimum and maximum amount of credit limit. The credit card limit is given by a bank. Upon your credit application, they will do a background check. They will consider some guidelines and specifications if you are qualified to pay a debt. They decide how much is your minimum credit limit. The minimum credit limit is the limited amount that you can acquire monthly. If you exceed the minimum credit limit per month and you cannot pay it within the expected payment date, that is when the additional payment for charges and interest will come. Of course, the higher the interest, the more it is an advantage for banks because they can get profit from your credit. Credit cards are basically the electronic money that you borrowed from the bank. It is necessary if you forgot to bring a volume amount of cash or you cannot afford to pay in one full payment. Instead of paying directly to your seller, you pay your credit to a bank. The creditor checks your credit history, and identify your credit score. A credit score may vary from how good are you in paying your credits. Your credit score is one of the creditors’ basis if you are allowed to have a credit card or not. They have a credit range that will identify you as a debtor.

 Why do more and more people choose to use a credit card?

 The credit card is useful for several places and situations such as hotels and airlines. It is easy to book a flight and room when you have a credit card. There are also stores or companies that will not accept cash for bookings or other purchases, therefore, it is also good to have your credit card. You can also use your credit card for your internet and application subscriptions such as Spotify, and Netflix. In this case, having a credit card is a convenient and efficient way to purchase or pay your subscriptions and bookings. A convenient way to purchase stuff without cash is the reason why more people choose to use a credit card. Aside from that, the people also choose credit cards because they can use it for emergencies such as during a fire, flood, or repairing their car. During emergency situations, people can use their credit cards to rent a car, booked a room for days, or renting a house. Therefore, more people use credit cards because they can just swipe the large number of things that they will purchase or services that they need. The other good thing about using a credit card is having a discount on malls, and restaurants. There are some stores that accept credit cards and give discounts to their customers. Discounts can help people save money from their discretionary expenses. If you are planning to build a business, having a credit card is also a good thing. You use your credit card for your rolling capital in your business. Some people would get a lot of credit cards because they will use them on different purchases. There are various types of credit cards to use for every purchase. There are credit cards that are exclusively used for restaurants, gas, groceries, flights, and technology. Using different types of credit cards for purchases can benefit also to the customer. It gives rewards, discounts, and points to a cardholder.

 Should credit cards be treated as ‘Emergency only’?

 It is not bad to have a credit card. It is a convenient thing to have, especially during emergencies. In situations like paying bills on the due date but you don’t have enough money to pay it on time, so you will use your credit card. If you cannot pay for it, you will go home without light and water, which is the worst situation. It is a good thing that you have your credit card during the worst situations like that. You can also use your credit card to pay for the services for your repaired car, paying your tuition, or paying bills in the hospital. If you cannot afford to pay the full payment, it is better to use your credit card. However, using your credit cards during emergencies depends on your situation and discipline. If you can afford to pay your credit within on time, then there is no problem at all because you have already paid the amount that you have borrowed from a bank. In contrast, if you cannot afford to pay your credit and you exceed the credit limit, it is not a good idea that you will use your credit card during an emergency. It will only add a burden to your financial situation. The more you will be in debt when you cannot pay your credit on time because it adds charges and interest.

 Treating credit cards as for emergencies may depend on your status. If you are a good payer of debt, there is no problem to use a credit card. Otherwise, you will retire with debt. The effective trait that a person could have in managing his/her finances is by having self-discipline. It is good to have self-discipline when using a credit card. Splurging on things that are unnecessary for us is bad at all. It does not mean that because we have a credit limit per month, we can purchase or swipe everywhere our cards. We must limit the swipe and discipline ourselves. Using credit cards is not the only basis during an emergency because there is also an emergency fund. An emergency fund is a long-term saving intended for emergencies only. We can use these funds instead of credit cards. It will not give us an additional payment in emergencies because it is our money, money that we saved for years from our income. It is good that we have our emergency fund or savings that will solely be used during emergencies rather than credit cards. The emergency fund is equivalent to your three to six months monthly average expenses. There are other financial products that could help us during emergencies such as insurance. There are various types of insurance that an insurance company offers. Most of them are life insurance, car insurance, and health insurance. The insurance type that you will get will depend on your needs. There are insurance agents or financial advisors that could help you in your cashflow. Credit cards are useful for electronic transactions. We can use our credit cards to pay our subscriptions, online bookings, online shopping, and other businesses. It is good to have a credit card. It can also help you during an emergency. However, if you use a credit card just for splurging things, it may give you a bad effect on your finances. We must know our limitations especially when purchasing some stuff. We must have the discipline first in our self before getting a credit card. After all, it is not about the credit card, it is about how we use the credit cards.

  References

https://www.rd.com/advice/saving-money/best-credit-cards-every-type-purchase/

https://www.bankrate.com/personal-finance/credit-card-emergency-fund/

https://www.thebalance.com/how-credit-limits-are-determined-4117390

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