Most people know what a credit card is. It’s a facility where the bank gives you the ability to borrow money. But few students understand what a credit card can do to help people manage their money. So I decided to write a blog on just a couple common benefits of credit cards.
Typically credit cards charge you interest, which is pretty much the same for all products where you borrow money from the bank. However one of the features of many credit cards is they provide you with a interest free period where once you purchase an item you don’t have to pay it back for perhapse 20 to 60 days depending on the card you have. So let’s look at how this can benefit someone.
Typically people’s spending patterns varies from week to week. Some weeks you might stay indoors and save money while others you may be out and about seeing friends and doing other fun things while not saving a dollar or perhaps spending more than you make. Typically people will spend more some weeks while saving more on others. There is those exceptions where you will have many large expenses, such as when you moving and buy new furniture or go on holidays.
The point I’m trying to make is that life’s unpredictable and by having a credit card you can borrow money from the bank to pay for these expenses and not have to pay any interest within the interest free period that the card offers you. If used correctly, Credit cards are effectively a permanent layby device for everything you buy, which can be really handy for managing cash.
That aside another benefit that some Credit cards offer you is rewards programs such as Qantas frequent Flyers or Virgin Velocity. Once accumulated, you can redeem points to go on holidays interstate or across the world. The more you spend on the card the more points you accumulate so you can understand that by putting expenses on a credit card rather than carrying around cash, might be pretty clever idea. Points can be redeemed for other things than just flights, such as alcohol or even something completely different such as a Treadmill. There’s a huge variety of options the programs offer so its definitely worth a look to check it out.
Of course Credit cards do have benefits and these are just a couple but there is also disadvantages of having credit cards. Many people lack the discipline to have a credit card in their wallet and not use it. It certainly took me a long time to build this discipline. So think carefully about if one is right for you. I plan to wright a blog on this topic soon.