Credit card – the dreaded piece of plastic that has put so many people in financial ruin. The most popular thing to do with this thing is to use scissors to cut it up in pieces.

But I think the credit card is really given too much flack. A bit too much more than it deserves because it can actually be a very useful item for a person who wants to have financial control.

Personally, I would whip out my credit card to make any purchase or payment instead of using cash. And here are the reasons why:

1. It is a full-proof financial documentation system.

One of the key steps to manage your finances well is to record all your expenditure. And a credit card records every single transaction made with it so you know what you have spent on.

This allows you to monitor all your spending on a monthly basis every time your credit card statement arrives. With that data, you can then plan your finances efficiently.

2. Eliminate the inconvenience of carrying cash.

One of the most annoying things to me is having a fat wallet filled with cash slotted uncomfortably in my back pants pocket every time I go out (I know! what a way to phrase a problem!).

So it goes without saying that when you only use your credit card, you don’t need to stuff thick wads of money bills in your wallet. It saves space and makes it more comfortable to sit down!

3. Earn bonus points.

Every time you spend with your credit card, you earn points. And when you accumulate these points, you will be able to use it as cash depending on the kind of points system your card has.

It’s really cool. You can use your points to claim for great gifts like watches, gadgets, kitchen utensils, toys, and sometimes you can even use it to off-set your monthly credit card fee.

4. Earn a positive credit rating.

If you use your credit card well and pay your monthly bill promptly, you will be able to earn a good credit history for yourself in the eyes of financial institutions.

This means that you will be more likely to get loan approvals and will be looked upon more favourably for all kinds of financial services by banks and the like.

5. Better foreign exchange rate.

Most major credit cards can be used almost anywhere in the world. That means you don’t need to carry many different currencies if you do a lot of traveling.

And not only is it accepted almost anywhere in the world, the foreign exchange rate is usually much lower than exchanging cash when your spending is converted back to your local currency.

So before you start putting the blame of financial debt on your credit card, stop and think about all the advantages first. Provided you use it wisely and responsibly, of course.

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*This article was first published on KopitiamEkonomi.com.
*KopitiamEkonomi is an initiative under the Economic Transformation Programme to educate Malaysians, kopitiam-style, about the economy.