5 Reasons to Use a Credit Card Instead of Cash

Although, primarily due to credit mismanagement, some are still convinced that credit card use is bad for you. We're about to reveal reasons why you should in fact use credit cards instead of cash and you will come to find that it may be more beneficial than having money in hand.

The use of cash can actually be more detrimental than credit cards because you may face a tough time figuring out where it all went, unless you record every little spend and diligently hold on to receipts.

 

Credit cards on the other hand have statements that allow you to track every little spend (except at the mamak of course!) to better monitor outflow of money. This of course is a great financial habit to have in being a wise spender.

 

Besides keeping track, it also saves you a tonne of time lining up at the ATM or rushing to one when you urgently need to make a transaction. Most merchants (eg: hotels, airlines, car rentals) are also making the credit shift with time and credit payments are now ubiquitously available on the grounds of convenience.

 

But beyond all these conveniences, a credit card is also easier to keep secure than cash. Lost your card? Simply call the bank and cancel it. You won't then be stuck out of pocket because of the loss or worse, theft. For sure, you can't call your bank to cancel the validity of the cash notes stolen from you!

Your credit score relies heavily on your lending and payment history with banks but how are banks to decide to lend you a big amount (for a house or car) if they have no idea what kind of paymaster you will turn out to be?

 

Having no credit can be almost as detrimental to your application as having bad credit (almost, though but not quite as we explain in a previous article). Luckily, having no credit can be rectified easily through the application, use and proper management of a credit card.

 

While physical cash has no contribution whatsoever to your credit score, credit cards can help bolster and accelerate your application process for large credit approvals through consistent and regimented repayment.

Big or small, purchase of goods and services with cash require immediate full amount transactions (situation dependent). Credit cards on the other hand, grants its holder a grace period on purchases. Pay your debt within the grace period and you will be charged no interest (usually within 20 days for most banks). If you feel you need a bit more time, you can opt to convert your purchase to an easy payment plan that most banks have. You will have to call your own bank to find out more, though.

 

This grace period allows one to better gauge monthly expenditure and it leaves savings untouched up until the time when your credit card bill is due. You might think such an option is just encouraging irresponsible spending but when the chips are down and you have an emergency that cannot wait for time to save – you’ll be singing a much different tune.

Believe it or not, some people sign up for credit cards just to milk from a tonne of perks and benefits they offer. And we can totally understand why if pit against the use of plain physical cash.

 

Each bank in the local market offer different range of benefits, and one of the most popular is the cashback card, where holders are able to earn rebates from their monthly credit card bill as they go around swiping.

 

Then there is the rewards points. The more you swipe, the more you rack up easy to earn points, which in turn can be used to redeem handsome gifts from the catalogue.

 

When paying with cash, you pay RM100 for an RM100 item; when using a credit card, you can pay RM100 and get RM5 back in cashback or accumulate points for a freebie. It’s a way to always get more for your money.