It’s time to stop believing that credit cards are evil tools designed to make you fall into a massive debt.
Some people are absolutely frightened of credit cards. It usually comes down to two reasons: knowing someone who had the misfortune of incurring a massive debt or having misconstrued how credit cards work altogether.
And some of these misconceptions are so absurd, it’s almost ridiculous! Here are some that really took us aback:
1. Owning a credit card will put me in debt
A credit card will only put you in debt when you don’t pay off your credit card bills in full on time–“on time” being the fundamental keyword here. The moment it’s past the due date, the interest begins piling on, and the only people you’ll be making happy are the banks.
2. Credit card interest rates are so high! I can’t afford it
Again, they’re only high if you don’t pay your bills in full on time. What you’re charged in a month you’ll be given 24 to 28 days to pay off, depending on the bank. This period is called the grace period as it charges 0% interest.
Repayment after the grace period will incur a daily interest, and is something you want to avoid completely. Unless, of course, you want to be in debt.
3. My friends have gotten into a lot of debt
There are three main reasons why people rack up so much credit card debt: they continuously miss making repayments, they charge more than they can afford on credit, and they don’t track their spending and debt at all.
If you’re a responsible spender, there’s no reason why you shouldn’t harness the credit card as a financial tool (it’s as awesome as it sounds).
4. I’ll forget to pay my credit card bills
Thank your lucky stars that GIRO was invented, then. Because now you can set up a GIRO link with your bank account and your credit card bills so you’ll never “forget” another payment.
5. A debit card gives me the same benefits, only it’s safer
Wrong on both counts. Credit card benefits include discounts, cashback and even air miles that you’ll never find with debit cards. It also helps you build up a credit history in the event that you might need to take out a loan.
And if you’ll never be able to dispute an amount charged on your debit card with the bank if you ever fall victim to a scam.
6. I have no need for discounts or air miles, and see no point in a credit card
If you ever want to apply for a housing, car or just any loan in general, the banks will first look at your credit score. Without any prior loans or credit cards, your credit rating would be CX, which means you don’t have sufficient credit activity for the banks to determine if you’re a reliable borrower. Even if you have the money to throw at them, they’re going to find it very hard to approve your loan.
Credit cards can help you to build up your credit score.
7. I don’t want to open an account with that bank just for their credit card
The very good news is you don’t have to. You can apply for Bank A’s credit card without ever having to open an account with them because you can pay from your account with Bank B. Banks aren’t that petty.
8. Credit cards have a lot of hidden charges
The truth is credit cards do come with terms and conditions, but they’re provided for you to go through them to fully understand what you are committing to. It’s really similar to you checking the acceptance box when you sign up for a Facebook account.
9. Credit cards are not safe, there are just too many scams that have happened
First of all, if you use your credit card vigilantly, the likelihood of a scam happening is very slim. But if you do fall victim to one, banks usually try to block payment or even give you your money back. This wouldn’t happen with a debit card–what’s lost will never be recovered on debit.
10. Having a credit card will make me spend more
It really comes down to your mindset. Just as how you don’t spend more than you can afford, you shouldn’t do it with a credit card. And if you’re that afraid that you would, you can always request for a lower credit limit (maybe an amount lower than your salary) when applying for a credit card.
11. I don’t know which one to apply for and there’s too much information to look at
And that’s why we’ve gathered all the information you’ll need from banks to put it in one easy to use comparison table. You can compare the best credit cards at SingSaver.com.sg and find one that will really help you save money.
Read This Next:
By Jehanne Teo
Starting out as a lifestyle writer, Jehanne currently writes for SingSaver.com.sg about saving money in everyday situations.