Lets start with the obvious – if misused, credit cards can land you in a world of trouble if not managed properly, racking up loads of nasty, interest-laden debt.
With national credit card debt in the billions of dollars, financial horror stories are common and understandably off-putting to anyone without one.
But before you flush your plastic down the toilet, take a moment to consider all of the good things a credit card can do for you.
Definitely not in an intrinsic sense, but most credit cards will reward you in some capacity whether it’s vouchers, frequent flyer points or even merchandise.
Be sure to compare the rewards on offer before signing up for a card that suits you. If you hate to travel, a card that gives you frequent flyer points will be about as useful as a screen door on a submarine.
You can compare rewards over at Canstar.
Build your credit rating
Credit ratings are often overlooked when you’re young because lets face it, it’s not something you bring up with an acquaintance at a house party at 2am.
But when the time comes to apply for a home or car loan, a strong credit rating is something you’re gonna need to get approval from the money lords at bank castle.
By responsibly using your credit card, you’re on your way to building a nice credit score, which isn’t something that cash or debit cards will do for you.
The best part is you don’t even need to put yourself in debt, as paying the balance off straight away will still accrue the same score. Bonza!
And how! With credit cards accepted almost everywhere, the days of cash money are numbered.
On top of that, the advent of Paywave and Apple Pay technology means you only have to wave your card or iPhone like a magical money wand to get the job done.
If you hate paying bills, why not setup a direct debit to your credit card? That way, you don’t need to worry about your excessive phone bill taking a greedy slice of your bank roll, but still have the piece of mind that it will be paid on time.
Protect your money
The best part of the plastic fantastic is that if you lose it, you can cancel it straight away with no loss to you, assuming you get to it before the thieves do.
If you lose your wallet or cash, it’s safe to say you’re probably not going to get it back, leaving you and your pockets uncomfortably light.
As an incidental bonus, a credit card serves as an easy way of keeping track of your finances.
When it comes time to make a payment on your card, you should reconcile your account to make sure you’re not overspending or being overcharged on your direct debits.
And when you need to set yourself a budget, having these records will make it easier to track your spending and identify areas where you can cut costs.