Is it worth having a credit card? Yes and no. It depends on many factors. In the following article we will see if it is worth having it and if so – what to remember not to lose and take advantage of having it.
Credit card – yes or no?
An important issue that determines the sense of having a credit card is, of course, using it. If we take a loan from it from time to time, then the card will be most useful to us. We can also treat it as an electronic purse. All you have to do is pay a certain amount and then use it, collecting (in some banks) various benefits.
However, if you do not use the card, or use it so rarely that it is enough for us to debit your account, it is not worth having. Especially since its existence reduces our credit standing. Why? Because the bank assumes that we can always use it, which of course will affect our solvency.
Credit card and risk to the borrower
However, there are situations when we must have this card. Then what? Is it possible to translate this burden into benefits? Yes, but under several conditions.
First condition: Credit card repayments should always (if possible) be made during the interest-free period. It is usually 20 days from the time the bank receives the appropriate transaction statement. After this period, the interest rate is accrued and – what is worse – begins to increase over time.
Second condition: Each customer with a commitment on a credit card should remember to repay the so-called minimum amount, which (depending on arrangements with the bank) will be about 5 percent of the amount incurred. If we do not do this, the bank may charge us appropriate penalties. This will naturally reduce our credit standing.
Third condition: We should not incur additional obligations above the card limit. Not only can it cost us a lot, it will also reduce our creditworthiness. So before we plan further expenses, let’s try to finance part of our obligations.
Fourth condition: It is not worth withdrawing funds from the card via an ATM unless of course there is no surplus on it. Doing so will allow the bank to charge us interest immediately. Remember that withdrawals from the bank are not covered by the interest-free period. Not only will it involve additional fees (including commissions), it will most likely reduce your creditworthiness in this way.
Timely repayment – an asset in our hands
It should not be forgotten that the timely payment of credit card obligations is associated with an increase in our creditworthiness. If we want to take out a loan in the long-term perspective, it is worth deciding on a credit card, incurring several liabilities on it and then repaying them on time (preferably in the interest-free period). Before we decide on a large cash loan, we must also give up the card. Only then – supported by a positive credit history – will we be able to count on more favorable credit terms.
A credit card can be a solid tool in your quest for a better credit history, thanks to which you will get the best loan available on Bank portal. Let’s not forget, however, that it is most affected by timely repaid cash loans and other large liabilities to the bank. A credit card can only help you get better terms from a potential creditor. That is why it is so important to analyze its benefits and losses before using it.