Cons and Pros of Credit Cards? And … “Don’t leave home without one!”

Credit card is a funny product. On the one hand, it can put you pretty quickly in trouble and in the worst case it can be the first step into a debt spiral. On the other hand, a credit card gives you the opportunity to make significant savings and allows better management of your home budget.

Today I will show you some benefits of having a credit card. If you are the first time on my blog, I encourage you to read the previous articles in this series:

  1. Are Credit Cards really as bad as they say about them?
  2. How do Credit Cards work?
  3. How much does Credit Cart cost?
  4. Cons and Pros of credit cards? And … “Don’t leave home without one!” (this blog)

BENEFITS (PROS)

And now let’s dive into the heart of today’s entry, that is to the benefits of credit cards.

CREDIT SCORE

The main advantage of having (and using) credit cards is to build your credit score. I know that some may not agree with this statement, preferring to care only about the current bank account statement. Meaning, money in your account is more important than credit score so, you don’t need one.

My dear readers, as a new Canadians living here for last year, I felt on my own skin what does it mean not to have a good credit score, and here are few examples:

RENTING

When you want to rent an apartment no one ever asked what my accout balance is. Every time real estate broker asked for my credit score. It turned out credit score is one of the most important requirements to be considered as a tenant. Account information does not help.

Landlord determines the amount of the deposit based on the credit score and if yours is a bad one, then in many cases you will need to pay bigger deposit. Many landlords would refuse to rent their home/appartament altogether, if you have poor credit score. Real estate agents also do not want to have anything to do with you when they know your credit score is poor. They will not tell you this straightforward, but you’ll very soon get a feeling of their lack of interest in helping you to find an apartment.

MORTGAGE and other CREDITS

Same as above. The first thing that any bank does, they will check your credit score. If you do not have one or you have a bad score, your chances of getting any credit is nil. It’s not like I’m a supporter of getting loans, but sometimes there is simply no other way out. There are sometimes situations in life where we have to get credit like mortgage for example.

CASH BACK

Depending on your credit card, you may have a cash back benefit. So, if you would spend that money regardless of whether you use a credit card or cash, why not use cash back? Whichever way you look it is a few dollars more :).

Of course, cash back can still be a little confusing. Remember not to spend more money than you have planned in your budget just to earn a few $ of cash back. It doesn’t pay. Spending more money just to get some cash back makes no sense and it is not good idea at all !

DISADVANTAGES  (CONS)

Credit card can be a treacherous tool though. If you use it wisely, it can give a lot of benefits (also financial). On the other hand, it may be the first step in the spiral of debt – just because:

  • the ease of access to money,
  • you don’t have to pay off all debt in a given statement cycle,
  • high interest rates as compared to other forms of credit.

So, if you are not able to control your consumptionism or temptations, you better catch up with any loaded credit card. Leave one card with a small credit limit which you can easily pay for your daily shoppings.

Remember: Credit cards are not fun toys. The usage can lead to bad debt if not properly controlled.

 

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Thank you and wish you a successful budgeting. If you have any questions – just comment 🙂

Cheers and see you with a next article,

your Kinga

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