If you are an observant shopper, you probably have noticed that a majority of the people shopping in big stores and malls now use credit cards to pay for their purchases. This is also true in restaurants, in spa’s and salons, in gasoline stations, in airline ticketing offices, actually – practically everywhere.
Truly, the number of people using credit cards has tremendously increased. This increase is very apparent if you look and count the cashier or teller lines in shopping malls and groceries exclusively dedicated for those who are paying through credit cards than those who are paying using cash.
Is this a good thing or not? Well, like everything else in life, it depends on how it is used. This also applies to credit cards. In and of themselves, credits cards are not bad per se; it is the manner with which it is used that makes it bad or good.
Benefits of Credit Cards
The use of credit card is designed so that it will be mutually beneficial for all the parties involved. In a normal credit card transaction, there are at least three (3) parties involved: the credit card issuer, the credit card user; and the business.
Credit card lenders offer them to borrowers for a profit. The profit credit card lenders make comes in the form of fees, charges, and interest.
For the business, they make an income when credit card owners purchase their goods/products/merchandise, or when credit card owners patronize their service establishment and pays for the services received. The business’s income then comes from the sales of good and/or services and the corresponding profit from the transaction that took place.
For the credit card user, the benefits are numerous.
One benefit is the ability to purchase things immediately. The credit card affords the holder the convenience of buying something without delay. This can be very helpful during times when huge “sales discounts” are offered unannounced by malls and stores. There are stores that come up occasionally with marketing and sales strategies which offers huge discounts for a limited period; the credit card allows the holder to take advantage of these discounts.
Credit card also allows the user to shop online or purchase things using the telephone. These transactions simply can not be done using cash; hence the necessity for a credit card or a debit card.
Using the credit card to purchase things or pay for services also allows the credit card user to use the bank’s money (or the lenders money) free of charge during the interest-free period; as long as the credit card holder pay’s the total amount before the due date.
The credit card can also be very helpful in paying utility bills before the due date. Failure to pay utility bills on time can be very costly because of the penalty or surcharge that will be added to the amount payable.
Credit cards can also be used to withdraw money from an ATM. This is also called Cash Advance, which comes with a much higher interest compared to the normal use of the credit card (paying for things or services). Again, the cost may be high, but the convenience it affords the user is very invaluable especially in emergency situations.
Many credit cards also have rewards system, which allows the user to earn rewards every time they use their credit cards. This means that the more often the credit card is used, the more rewards earned. The rewards are also very appealing to almost everyone. Rewards come as free travel miles, free airline tickets, discounted products, or cash back.
In a nutshell, credit cards can be very helpful, but only if you know how to use them to your advantage. To maximize the benefits of credit cards, always pay 2 days before the due date; avoid carry-over balances; and spend only on things that you can afford. Never abuse your credit card.