Plastic or No Plastic (Or, How Not To Allow Credit Cards To Rule Your Life)

Truth be told and coming from experience, I’ll be quite biased here. If you don’t need one, don’t get a credit card. Seriously. It can potentially ruin your financial life. I’m not kidding. If you can pay cash anyway, use cash.

But for the sake of journalistic fairness, I’d like to present to you the potential benefits and the possible drawbacks of owning a piece of swipe-able plastic.

Why should I get a credit card 101

Credit cards are potentially a good thing, if you pay your balance in full and on time. If you can’t commit to that, please proceed to the next section.

There are a lot of benefits that you can derive from owning a credit card. However, this comes with the proviso that you have to use it correctly – by paying your amount due in full and on time, all the time. A credit card can help you manage your finances better by allowing you to consolidate all your bills and pay them all at the same time. The problem with paying utility bills is that they all have their own due dates. A lot of credit card products have auto-debit facilities that allow you to settle your utility bills at the same due date as your credit card.

Some credit card products allow you to earn miles with a partner airline company. This is good for people who love traveling or who are constantly traveling because of business needs. At the same time, with the advent of online booking and e-ticketing, it’s more convenient nowadays to book and buy your ticket online rather than reserving and paying with a travel agent. But you would need a credit card for this. Credit cards also allow you access to online shopping and acquire products at a potentially lower price online compared to buying it in a physical store.

Other specialty cards allow you to get special rebates on your purchases which I think is a good thing because it helps save you money on essentials such as gas, groceries, utilities, medicine, etc.

Many credit cards offer reward points that allow you get products as a reward from a rewards catalog. Now this is something that I wouldn’t wish on anyone. It provides you an incentive to use your credit card as often as you can to get points. You’re piling debt on yourself just to get that reward item. Why not just buy it if you really need it?

Why should I not get a credit card

Remember that the credit card industry is a business which thrives if more people have more debt, so it is in their best interests to keep you indebted. The promos that they create aim at the end goal of you taking in more debt that you can handle, at which point, they will offer you the “courtesy” of converting your balance. They make more money on this by charging interest on your converted balance. You’re already paying interest on interest.

Credit cards can also paint you an unrealistic picture of financial health. Some credit cardholders regard their credit limit as an extension of their bank accounts when actual use of it eats up on the amount of money you actually have. This unrealistic picture may lead you into making poorly thought out financial decisions which may put you further in debt.

A lot of people have fallen into a bad cycle of credit that they just can’t pull themselves out of. If you feel like you’re in one, seek expert advice. But even before you get yourself into the possibility of that situation, ask yourself first these two questions: 1. Do I really need it? 2. Will I be able to use it within my means?

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About Benedict Bernabe

Benedict Bernabe, 27. Benedict has a Master's degree in Development Studies from the University of Melbourne, Australia and a Bachelor of Arts degree in European Languages, cum laude, from the University of the Philippines Diliman. He has worked with the United Nations in the Philippines as the Community Facilitator of the Community of Practice on HIV&AIDS. He worked with Standard & Poor's Capital IQ, a financial information company, as researcher, translator and quality analyst in the investment research team. Prior to this, we worked at IBM Business Services. Benedict is a certified yoga teacher.

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