Thread by @myfinology

Is it worth getting a credit card? 💳

Pros
✅Helps you during emergency
✅ Builds credit history
✅ Discount, cashback & rewards

Cons
❌ May lead to overspending
❌ High interest cost
❌ Risk of fraud

What should you do? A 🧵

#personalfinance #creditcard #investing

The answer to this question depends on your "Spending behavior".

There are endless advantages to using a credit card,
but you should get one, only if you can use it responsibly.

Who should avoid credit card 🙅‍♂️

❌Impulsive buyers
❌Delinquent bill payers
❌ If you don't save anything
❌ If you want to fund your luxury by using a credit card

When to get a credit card?

✅ If you want to buid/rebuid your credit score

If you don’t have a credit history or have poor credit, opening a new card can help you raise your credit score.

✅ You want to utilize interest free credit period

Credit cards comes with an interest-free period of 45-60 days. You can avail free credit, if you pay off the entire balance due by your card bill payment date.

So, if you need short-term credit, Credit card is a great tool.

✅ You’re planning a vacation

Travel credit cards can provide travel insurance for trip delays and cancellations, lost luggage reimbursement and more.

This is a great way to save on added insurance plans and provides peace of mind when you book vacations.

✅You’re paying off debt

If you’re struggling to pay off credit card debt, a balance transfer credit card can help you rid yourself of debt faster and cheaper than keeping it on a high interest card.

What are the risks of a credit card?

The biggest disadvantage of a credit card is the minimum due amount trap. Many users pay only this figure which leads to a pile of debt and high interest burden.

It also encourage you to spend more, with the promise of rewards and points.

How do I use a credit card responsibly?

- Read fine prints carefully. Do not spend on unnecessary items.

- Take advantage of the grace period and pay off the balance in full before the due date.

- Try not to max out the limit.

- Monitor your credit on a regular basis.

- Keep your card & card details secured. Report immediately if lost or stolen.

- Take advantage of Rewards, cashbacks & other benefits and redeem them before the expiry date.

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