According to statistics from the Malaysian Insolvency Department, about 70 people are declared bankrupt in our country daily; and this number is increasing from year to year.
Of course, this is a worrying phenomenon, and from this amount approximately 5% to 8% of people are bankrupt because they cannot pay their credit card debt. We disagree. Credit card are not the reason they go bankrupt. NO DISCLAIMER when paying is the real cause.
But for those who are highly disciplined and able to control spending, it is accompanied by prudent use; Credit cards can certainly provide some of the following advantages:
Can track and monitor expenses
Each transaction is recorded automatically and we get a complete statement of our spending habits. For example, we know how much we spend each month on refueling, buying kitchen necessities, shopping and more.
If using cash you need to write one at a time. With a high level of knowledge and awareness of the direction of spending, we can avoid over-spending and thus promote good spending habits.
Convenience and comfort
Credit cards let us deal more easily; whether it’s booking flights, hotels, car rentals and so on. In emergency cases too, it can be useful as an advance when dealing with unexpected problems.
Spending on a credit card usually doesn’t accrue any benefits for 20 days, so we can delay payments and use the money on other investment instruments for a while that can get a return (though a little, when summed up in a year, will certainly add value).
Credit card spending is protected, and any unauthorized access usually does not directly affect our savings. Any unauthorized transaction may be reported to the bank by submitting a dispute report for further investigation and action. Most banks also provide free travel insurance with the use of their credit card.
Every dollar spent on a credit card qualifies us to earn points. In the long run, these rewards will accumulate heavily and can be redeemed by attractive gifts offered by the bank; usually shopping / gasoline vouchers, electrical goods or travel rewards (miles) from airlines.
If we have a good track record of repayment, we will have high credit scores and will facilitate our loan applications for the future. This is important if we want to get a home loan for the first time. Maybe having a good credit score will allow us to get a lower interest rate loan.
The 5 advantages above are good reasons to use a credit card, but they need to be used with a great deal of self-discipline! Remember, your credit card bill must be paid within the stipulated time, in full payment, on a monthly basis.
Choose a credit card from a bank that excludes annual charges and shariah-compliant products. Avoid buying impulsively and more than we need. It may seem difficult to do, but it will be easy with high determination.