It’s true, credit cards can be nasty for a number of reasons, such as:
- you’ve chosen the wrong card type;
- you’re in a troubling financial position and obtaining a credit card will over-extend you;
- you’ve got too many bills, and remembering an extra one is too difficult;
- you treat the limit as ‘free money’, instead of seeing it for what it is;
- if managed poorly, they can ruin your credit rating;
- if you don’t follow your bank’s fraud and dispute resolution procedures, you could lose money if you are defrauded;
- they could tempt you if you don’t exert self control; and so on.
Really, I can go on for hours about why many people choose not to get a credit card.
I’m not here to do that though. I’m here to explain how I take advantage of the banks. There are ultimately three main reasons, and I will gladly address the above points to explain why in my particular situation, I am not too phased by the above.
Why I have a credit card:
- Frequent Flyer points program;
- Easy online payments for goods and services; and
- Bill / pay cycle management.
Frequent Flyer points program
In terms of managing money, everyone has different priorities. As someone who rarely holidays by choice, I have to say that obtaining a deal on frequent flyer membership was fantastic for me. This did not come with the credit card, but it certainly helped paved the way towards me getting a card. Many cards come with a frequent flyer points bonus. My first credit card came with 40,000 points – a boost that helped me go on the very trip that started this blog.
Needless to say, I signed up for a credit card with an interest-free period long enough that meant that I never, ever pay interest – ever. Instead, I accumulate frequent flyer points for free. It works because I am always on time, so the banks can’t fault me for that. What it means for me is that I can accumulate many points over time and obtain free flights, and I really cannot say no to that.
Easy online payments for goods and services
Many merchants accept online payment via credit card these days. You can actually stick your credit card onto your Paypal account, securely paying for everything and accumulating points for the purchases that you would otherwise have made.
Also, there is no need to be concerned about your Debit card being compromised. I can speak from banking experience that it is often much more difficult to stop scammy merchants on a Debit card, savings or transaction account than it is a credit card.
So in other words, there is a little more peace of mind (at least in my mind) for those of us who are concerned about their details being compromised.
Bill / pay Cycle Management
If you find that your employer is a little bit less accurate with your salary, don’t worry – you can still pay your bills on time with a credit card. You just need to make sure that you aren’t always relying on this and are always paying your card on time. Otherwise, you’ll need to pay interest.
You can also talk to your bank to change your statement cycle to be more suitable, but this can take a few cycles to arrange.
In summary, those are my reasons for using a credit card. It costs me nothing and I reap the benefits of free flights. When applying for a credit card, be sure to be honest in your application and only get it if you don’t currently over-spend, as if you do, this will only put you into a negative financial situation.
I would never get a credit card if I thought I needed it. I don’t ever use it for emergency purposes, as that’s what an emergency cash fund is for. Also try to remember that if you are in a position where you might need one, that there’s a reason why the bank might give you one – and it is not necessarily for your best interest.