When people talk about credit cards, there is often a lot of uncertainty that surrounds the topic and understandably so. They are a tricky thing to understand and, if not used wisely, can result in overwhelming debt.
However, there are some benefits of a credit card which our financial advisors came together to discuss, and we will share them in this article.
Before we get started on the potential benefits of using a credit card, here are a few important things to remember about them:
Now that we have the warnings out of the way, here are some ways that a credit card can work to your advantage:
If you are diligent with your payments, you can use your credit card to build a healthy credit score which will earn you some additional benefits such as lower interest rates in the future or easier access to loans. However, the key here is regular, timeous repayments on your credit card.
A credit card can assist you in emergencies if you don’t have an emergency fund in place, or if your emergency fund does not fully cover the unexpected costs. Use it to pay for a sudden vehicle breakdown, an unexpected illness, or medical emergencies. But remember to pay this off as fast as you can. Also – fancy holidays or home makeovers are not emergencies.
Most credit cards offer an interest-free grace period. This means that there is a period before the interest rate kicks in and, if you pay off your credit card before, you can enjoy interest free payments. This is not available on all credit cards, so be sure to check this before you sign on the dotted line. Also remember, that all credit cards come with annual fees which are separate from interest rate, and you are obliged to pay these.
Generally speaking, credit cards can be used anywhere in the world, as long as there are credit card facilities. This means that should you be somewhere far from home, and you run into an emergency, you can use your credit card to bail you out of trouble. This can also help you save on expensive currency exchange rates.
We know that the idea of having a credit card can be scary, and rightfully so. Without the necessary discipline, credit cards can get you into a lot of financial trouble.
However, with the right guidance from our financial advisors, you can manage your credit card well, using it to your advantage.
We offer a comprehensive range of financial services, including personal financial planning which addresses smart debt management and saving strategies.
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