Is Credit Card Good or Bad?

Have you ever wondered whether having a credit card is good or bad for you? For most newbies in their first jobs, getting a credit card is a sign that they are finally independent! It is a cause for celebration and may cause many to eagerly take the irresponsible first swipe.

Whether having a credit card is good or bad depends on how you use it.

Being approved for a credit card seems like an announcement to the world that you can now pay for your own bills. But when you see your first (hopefully, not yet very enormous) bill or several unpaid bills afterwards, your feelings might change and you might feel less independent and more helpless.

For those already mired in credit card debt, the credit card becomes the object of many negative feelings and they just want to get rid of it. So their advise for newbies is to not acquire one in the first place because its a debt trap.

The reality is, you can have a credit card and not be trapped in debt. Many have learned this the hard way and have now learned how to handle their credit card more responsibly. Here are some reasons and lessons on why and how a credit card can be bad or good for you.

The Bad: How NOT to Use Your Credit Card

Let’s try to get the negative stuff out of the way first. Many of the negative feedback that has accumulated around credit cards is mostly due to irresponsible swiping and a lack of understanding of how credit cards work.

To avoid getting into the credit card debt trap, make sure to read the fine print and ask questions about your credit card before your first swipe. Then, make sure to not do the following:

  • Charge items that you can’t pay off immediately on your next salary schedule.
  • Exceed your credit card limit. Please don’t do this especially on your first swipe.
  • Paying only minimum payments.
  • Making late credit card payments.
  • Owning too many credit cards. If you haven’t practised managing just one, don’t assume you can manage more than one.
  • Lending your credit card to somebody else.

Sadly, the last one is one of the most foolish things you can do when you get your credit card but peer pressure is a strong influence and most people just can’t say no to a friend in need. Learn to say NO or you might get yourself trapped in credit card debt that is not your own and you might even lose a friend in the aftermath.

If you are already having problems with your credit card, here are ways on how to get out of your credit card debt.

The Good: How to Use Your Credit Card

Now for the good news. Being a responsible credit card user means enjoying its many benefits without having to be burdened with enormous credit card debt. When you get your credit card, keep these things in mind:

  • Pay for your swiped items as soon as you get your salary.
  • Do not exceed your credit card limit. Try not exceeding 70% of your limit so you have some leeway for unaccounted expenses that you need your credit card for.
  • Pay more than the minimum payment to ensure that you lessen the principal amount and not just the interest and charges. If possible, pay your credit card balance in full every month.
  • Pay on or before the due date to avoid additional late fees and charges.
  • Keep yourself to one credit card and learn how to manage it well.
  • If a friend needs your credit card, ask them to pay you in cash first, then swipe your credit card. Make sure to transfer the cash payment to your credit card immediately as well.

Generally, when you swipe your credit card for a friend, you should only do so because they need a credit card to complete a transaction, usually online. This means that they should already have the cash to pay for the transaction in the first place. The credit card is only a “way” to facilitate the payment and not the actual payment. If it were to be the actual payment, then they should ask to borrow cash from you instead.

Remember that using a credit card as the actual payment includes interest fees and charges if not paid on time. So if your friend insists that they will pay for the payment using your credit card, then make sure they understand that they will also have to shoulder the additional charges as well if they cannot pay on or before the credit card’s due date.

Why Should You Have a Credit Card?

A credit card can provide you with several benefits if you learn how to use it responsibly. Here are some advantages to having a credit card:

A credit card can offer many benefits.

Spread Cost
Since credit cards are as good as cash, it allows you to make purchases that may not be available another time. For example, if the item is on sale for a certain number of days only and your salary date is still far away, you can use your credit card to pay for the item and then pay your credit card in cash when your salary comes around.

Pay Online
Some online services require credit card payments such as some airline companies and other online shops. A credit card is handy so you can pay for the transaction and purchase the item you want which is not available or inconvenient to get hold of offline.

Make Reservations
This also usually occurs online. Some companies require a credit card for you to make a reservation even if they don’t actually use your credit card to receive the payment from. The credit card just serves as a guarantee or insurance of sorts that demonstrates to them that you are indeed capable of paying for their services or products.

Consumer Protection
This is one of the most basic but also the most taken-for-granted benefit of a credit card. Most credit cards alert you to online scammers on their black list. So if you make a purchase online using your credit card to any of these sellers, your credit card company may decide to cancel your transaction automatically or call you to warn you about the seller so you can choose to cancel the transaction.

Also, if you buy from a legitimate seller and you have issues with the transaction or the goods you received are faulty, you can request for a refund from your credit card provider.

Get Something Back
Good credit card payers and loyal credit card users are often rewarded with cash rebates or freebies such as free items when shopping, free tickets to concerts, exclusive invites to hotel buffets, special events and many more.

Rebates are often offered when you have accumulated a certain number of points by using your credit card when paying. Freebies are often provided for those who are good payers and who have been loyal to using the credit card for a certain number of years.

Of course, all these benefits can only be enjoyed if you are a responsible credit card user and you should have a lot of time to practice as it takes some time to accumulate points and be considered a good payer by credit card companies.

So is credit card, good or bad? The answer depends on how responsible you are at using your credit card.

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