Your Credit Card is not Your Enemy — Debt is!


Do you feel uncomfortable at the thoughts of having your own credit card?  The numerous stories that abound, on people that accumulated and ultimately caved in under credit card debt may be enough reason for you to feel uncomfortable but this shouldn’t be the case.

Your credit card is not your enemy and should never be scary. Debt is the enemy.  If you are able to use your card responsibly, you will quickly discover that your credit card account is not only a convenient way to pay, but also one that holds several benefits and can improve your financial life.

How is a credit card useful?

Quick building of credit history

With responsible use of a credit card, you can quickly build a healthy credit rating.  This comes in handy when it is time for you to rent an apartment, get on the property ladder or even get decent deals on insurance. All you need to do is to pay your credit card charges on time and then make sure that the balance on the card is below 30% of the available credit.  Banks, lenders, landlords and even employers take a look at your credit profile before any transactions. This could mean significant savings on interest and easier financing of important goals.

Fraud Protection and Online Safety

By paying with a credit card online, you can dispute charges that you are not happy with and they will be investigated and resolved. Additionally, most credit cards come with protection against the unauthorised use of your credit card to make purchases.  Debit cards generally do not have such protections so fraudulent withdrawal of money through a debit card often translates to a loss.  Other perks like additional warranty, guaranteed price protection and so on, also means that it is in your interest to make purchases with credit cards.

Rewards and Cashbacks

Almost all credit cards in the market today have some form of reward programs attached. With this, you are guaranteed free money every time you card is used.  The rewards can be in the form of points that can be used to claim discounts on future purchases or it could be in the form of straight cash returns to your account. Either way, you are saving more money than anyone that opts to pay cash or opts to use a typical debit card.

So how can you avoid or fight credit card debt?

These are some simple and trusted rules that have worked for many people and can work for you as well:

  1. Shop around for the right credit card for your situation (interest rates and other clauses should be properly analysed).
  2. Draw up a limit to the balance every month. Remember debt begins to mount when you can’t pay off the balances.
  3. Know when you are exhibiting signs of problem credit card debt.
  4. Don’t pay back the minimum repayment amount each month. Pay even higher if you can afford as it is the fastest way to avoid paying exorbitant interest rates for too long.
  5. Avoid balance transfers unless absolutely necessary.

It is time to start seeing your shiny plastic for what it is: your friend in the journey to financial independence.

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