If you don’t have a credit card yet, you might not know that it actually has a lot of benefits. Some people even see credit cards as a risk. But the truth is, if used correctly and responsibly, it can be a better payment mode than cash and debit cards.
Without further ado, let’s take a look at what’s in it for you if you get one.
1. You can get cashback and rewards
One downside to paying with cash or debit cards is that you don’t actually get anything in return.
Say an item you want to buy is worth RM50. You pay for it with cash or your debit card, and that’s all there is to it.
With credit cards, however, you can get benefits each time you swipe your card. There are all sorts of credit card rewards these days: cashback, points, freebies—you name it. For example, there’s the Maybank Shopee Visa Platinum Card which gives you a generous amount of Shopee coins even when you use the card outside the Shopee app. There’s also the Alliance Bank Visa Signature Credit Card which will reward you with 5% cashback on all of your retail spends.
2. Easier to use during travel
As you would have heard, travel is back again and you can even go overseas right now if you like.
Carrying large amounts of cash when travelling overseas can be a hassle. But more importantly, it’s also unsafe and your precious money could end up getting stolen. So instead of carrying bundles of cash, why not carry one slim credit card around conveniently?
Sure, credit card theft can happen to anyone. But if someone were to steal your credit card, you will get notified if it’s misused and you can then block your card so your funds are untouched. But with cash, once it’s stolen, the chances of you retrieving your money are close to zero.
Most credit cards can also be used in any country. So, you won’t have to worry about having to look for a money changer in case you run out of the local currency in your holiday destination.
3. It can help improve your credit score
A credit score is basically a marker of how soon you can repay your debts and how financially responsible you are. This is why having an impressive credit score is vital. And if you plan to buy a new house/car at some point and you’re going to take a loan, your loan’s approval will depend on how good your credit score is.
But how does using a credit card, which is an added financial commitment, improve your credit score? It all comes down to how quickly you repay your credit card debt. So, if you have a credit card and you diligently settle its amounts on time, this will reduce your debt which in turn will increase your credit score.
And understandably, being late with payments will only have a negative impact on your credit score. To avoid this, make sure you don’t overspend and be mindful of your repayment dates.
4. You can get a balance transfer
Debt management is a tricky thing. You start off with a little amount of debt and before you know it, you're thousands of ringgits in the red and you don’t know how to clear it off. With most types of debt, if you’re having trouble repaying, you’ll need to work it out with your debtor to restructure your payment plan.
With credit card debt, however, it’s a bit easier as there are balance transfer plans. What happens here is that if you have several credit cards with outstanding amounts, you can transfer all of them to a single card to make repayment easier. There are banks who will allow you to do this at no extra charge. Alliance Bank’s Balance Transfer, for example, allows you to transfer your credit card amounts at 0% interest.
5. It has flexible payment plans
As mentioned in the previous point, handling debt isn’t easy. With most loans and other types of debt, you’ll need to pay the fixed amount stipulated by the debtor each month. Credit card repayments, on the other hand, are a lot more flexible: you can either repay the full amount you owe or a monthly minimum amount stated by the bank. This amount would vary between each bank and credit card, so make sure you clarify this before signing up for the card.
There are a lot more upsides to signing up for a credit card besides the ones stated here. The biggest tip in being a responsible credit card user is to ensure that you spend within your means and repay your debts on time. If you manage to do this, there are a lot of credit card perks you can enjoy.
You should also get a credit card that suits your needs best. This can be difficult to find, as there are hundreds of them out there. Fortunately, here at CompareHero.my, we can help you select a credit card that’s best for you! Just click the button below and you can filter through the many credit cards available on our platform. You can also call us at 012-385 0211 for more information.