3 Practical Reasons Why You Should Get A Credit Card
While they are several reasons why using credit cards can be dangerous, here are 3 practical considerations why you should be using one.
1. You are not exposed to financial frauds.
If you have watched the movie “Catch Me If You Can” starring Leonardo Dicaprio, then you will be familiar with the real-life character he was acting out – Frank Abagnale Jr.
Source: slantmagazine
In the talk given at Google in 2017, Frank explained why he owns credit cards but never a debit card.
By using a credit card, he is spending Visa’s or Mastercard’s money but none of his own.
His money remains in the bank and continues to earn interest.
If someone charges $1 million dollar into his credit card, his personal liability is zero.
The bank will take care of it.
However, whenever you uses a debit card, everytime you use it you are exposing your money in your account.
You can watch his explanation in the clip at 40:00.
2. You are building your credit score.
When you are applying for a housing mortgage loan or a car loan, banks and financial institutions will check your credit score.
It is a collaborative effort by all major finance institutions in Singapore to aggregate your financial credit, spending and payment history.
The higher credit score you have, the lower you are deemed as a risk to the banks.
And everytime you pay off your credit card bills promptly, you increase your credit score.
When you use your debit card for 20 times a day for the next 50 years, you will still not raise your credit card score significantly.
3. You get to earn rewards and cashbacks.
Paying with credit cards can reap you rewards and cashbacks on money you are going to be spending anyway.
Sometimes, the cashback can be up on 1% on transportation, travel, restaurant dining, nightlife, entertainment, offline and online shopping or telcos.
If you are not reaping the rewards, you may be subsizing others who are.
Although there might be annual fees for some cards, most allow waivers, some up to 5-year – which is essentially equivalent to having no fees.
Do note the minimum credit card sign up age is 18 years old.