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Do I need a credit card?

Getting a credit card can be the next big step towards becoming a full-fledged adult. You have to admit that there’s something exhilarating about swiping a piece of plastic to pay for things. But like in most cases, many are unaware of the temptations that come with it, leaving them in great debt.  

Credit cards have their fair share of advantages and disadvantages, which we will discuss in this article. If you’ve ever wondered whether getting a credit card is something you should go forward with, this post may help you decide. 

Common Misconceptions About Credit Cards 

Let’s talk about misconceptions first because you likely may have your own. Because of a lack of understanding about how credit cards work and their potential implications, most people could be thinking: 

It’s Free Money 

One major misconception is that owning a credit card means having access to free money. However, credit cards are not a source of income but rather a line of credit that requires repayment. Any purchases made using a credit card must be paid back, usually with added interest if not paid in full. 

They Build Instant Credit

Some people believe that getting a credit card automatically guarantees a positive credit score. Responsible credit card use can help build a good credit history over time. But it doesn’t happen instantly. It requires consistent and responsible repayment behaviour, including paying what’s due on time. 

Minimum Payments are Enough 

Another misconception is that making only the minimum payment on a credit card each month is enough to avoid consequences. It’s not true. Making the minimum payment keeps your account in good standing, but it’s essential to understand that paying only the minimum will result in interest charges on the remaining balance. Yes, you can pay it off eventually, but this can potentially lead to long-term debt. 

All Cards are the Same 

Many people assume that all credit cards are essentially identical. However, they can differ significantly regarding interest rates, fees, rewards programs, and other benefits. If you’re getting a credit card, comparing and choosing one that aligns with your financial goals and spending habits is crucial. 

Ending a Credit Card Improves Your Credit Score 

Contrary to popular belief, closing a credit card account does not necessarily improve your credit score. It can sometimes have a negative impact. Closing a credit card reduces your overall available credit, which can increase your credit utilisation ratio

Understanding the misconceptions versus the truth will help you manage your perspective about getting a credit card. 

Pros and Cons of Having a Credit Card 

Although credit cards have become an important part of our modern society, it’s always best to use them responsibly and cautiously. Even if they seem to offer convenience and flexibility, it’s better to weigh the pros and cons before deciding whether to get one or not: 

The Cons

  • Debt trap – one of the biggest drawbacks of credit cards is the potential to fall into a debt trap. It’s easy to overspend and accumulate a hefty balance, especially with high-interest rates on unpaid balances. 
  • Interest charges – if you cannot pay the balance, when payments are due, you’ll incur interest charges on the remaining balance, adding to your overall debt. 
  • Impulse spending – Cards like these can very easily tempt us to make impulse purchases that we might regret later. It’s very tempting since purchases can be paid with just one swipe. 

The Pros

  • Convenience and security – credit cards provide a convenient and secure way to make in-store or online purchases. They offer fraud protection and easier dispute resolution than other payment methods. 
  • Building credit history – responsible credit card use can help establish and improve your credit history, which is essential for future financial goals like applying for loans or mortgages. 
  • Rewards and perks – many credit cards offer rewards programs, such as cashback, travel points, or discounts. If you manage your card wisely, these rewards can give you valuable benefits. 

Are There Any Alternative Options?

While credit cards have drawbacks, it’s essential to recognise that alternative payment methods like Afterpay and Zip Pay can also have similar risks. These services allow you to pay for purchases in instalments but come with fees and costs.  

Also known as buy-now-pay-alter programs, you might ask, “Are these alternatives better?” Depending on specific circumstances, like the terms of the buy-now-pay-later program you went with, it’s possible. But remember that how they work is essentially the same, so it all boils down to your spending and repayment habits.  

Making the Right Decision 

After weighing the pros and cons, it’s up to you to make the right decision. Before you do, it’s important to assess your circumstances. Consider the following factors to arrive at the right decision: 

1) Evaluate your Financial Situation 

Take a close look at your financial situation. Assess your income, expenses, and any existing debts you may have. Understand your financial stability and whether you have the means to manage additional payments that come with the owner ship of these cards. 

2) Consider Your Repayment Ability 

Think about your ability to pay off the card balance each month. Paying the balance fully within the grace period allows you to avoid interest charges and accumulating debt. Assess your cash flow and determine if you can consistently make timely payments.  

If you think you can only make minimum payments, you must understand the potential long-term impact of carrying a balance and incurring interest charges. 

3) Reflect on Spending Habits and Discipline 

Be honest with yourself about your spending habits and self-discipline. Credit cards can be tempting, and it’s easy to fall into the trap of overspending. Assess whether you have the self-control to use a credit card responsibly, stick to a budget, and resist unnecessary purchases. 

Remember, getting a credit card should be based on a comprehensive understanding of your financial capabilities, spending patterns, and commitment to responsible financial management. Take the time to evaluate your situation and make a decision that suits you best. 

It’s Important to Create Better Habits 

To avoid falling into debt or relying heavily on credit cards, it’s crucial to develop good financial habits like budgeting, saving, managing your debt correctly, paying bills on time, and so on. Instead of buying things before you can pay for them, set savings goals for the items you want to purchase.  

If you’re struggling with your finances, Help My Wealth can assist you in creating a plan. We can also set you up with our budgeting system, making the process easier and more streamlined. 

need a credit card


Do I need a credit card?



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