Your Finance Travel Buddy presents One Simple Step

Happy Sunday fellow Financial Freedom Seeker

Mindset Moment

One Simple Step

Some people criticise credit cards for being a means for you to put yourself in debt and encouraging you to spend more than you can afford to. 

To those people I say, you will struggle to flourish financially if you can’t maintain control over your spending. Instead of blaming a piece of plastic for overspending, it is your responsibility to manage your spending. 

When used responsibly, a credit card can be a very beneficial tool. 

Your One Simple Step this week is…

Research, and consider using, a credit card

The Basics

Credit cards become an issue when you don’t pay them in full each month and end up in debt owing money on the credit card that usually has a very high interest rate. 

Credit cards can also be an issue if you spend more than you intended to either because you’re in pursuit of parks like points or you can’t control your spending when it isn’t capped like a debit card. 

As long as you don’t fall victim to the above two scenarios, credit cards can be extremely beneficial.

The Benefits

If you utilise your credit card on purchases you would make anyway e.g.. groceries, and set up a direct debit so it is paid off in full each month, you are in a position where you can benefit from a card rather than suffer. 

1. Build a credit score 

If you spend a low amount of money each month compared to your credit limit (less than 30% is the recommended figure) and pay your credit card in full each month, this will contribute to improving your credit score. A good credit score helps you take out loans in the future. The prime example of this is a mortgage for when you want to purchase your first home. 

2. Credit cards come with perks

These vary by credit card provider, but it is possible to get cashback when using your credit card so your purchase in effect costs less. It is also possible to collect points which can be redeemed against things like flights thereby reducing other costs you would make like holidays. Which credit card you should get therefore depends on what types of perks you want as well. 

3. Credit cards offer enhanced protection over debit cards  

Credit cards monitor your account for suspicious activity and usually don’t hold you responsible for unauthorised charges offering protection against fraud. They can also protect purchases you make using the credit card like extended warranties or protecting new purchases against damage or theft for a limited time after purchase.

Watch this reel on the benefits of credit cards

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Have a fabulous week ahead!

Until next week

Pernia | Your Finance Travel Buddy