Why Consumers Need Credit
The abuse of credit cards in society today is sadly widespread and misunderstood. The problems that develop from keeping up with just the minimum payments leads to significant anguish in a relatively short period of time.
There are however tremendous benefits that can be derived from the intelligent use of credit cards, which I will outline.
Credit Card Benefit 1 – Convenience
The first set of benefits deals with enormous benefit of having the conveniences of a credit card instead of paying by cash.
Sometime it is an outright necessity of having access to a credit card to function in society today. If you need to rent a car, book a flight or hotel or buy food on an airplane you need to provide a credit card. Many online sites require purchases by credit cards only. Cash alone is insufficient in so many instances.
It also allows payment of many routine expenses without necessarily needing to carry cash. For instance, filling up your car. With a credit card you can fill up and pay by card all at the same spot. You do not have to line up to pay for your purchase to pay in cash. Gas stations strongly encourage you to pre-pay by using a card as it saves them many hassles.
Credit Card Benefit 2 – Catching a good sale
Credit cards allow you to make purchases and pay for it so it matches your income stream. So for instance you need to buy a new outfit for work and you see it on sale but you just don’t have the cash to pay for it. You can then take advantage of the discounted price instead of waiting until you have the cash in hand.
The really critical point here however is that the convenience aspect must never push aside the importance of not buying something that is unaffordable. Whatever you buy must conform to a budget that you set for the beginning of each month. The downside with credit cards is that it is all too easy to stray from a budget. It is essential to never put on credit what you can’t pay for within the month.
Credit Card Benefit 3 – Building a strong credit score
Another major benefit to using credit cards is to establish, improve or rebuild a credit score. Let’s face it, in order to make large purchases like a house or car – lenders want to see that you can borrow money and pay it back in a timely manner. The credit bureaus keeps track of how much you owe and your ability to make payments on a regular basis against borrowed money. They then assign you a score and lenders can then determine your risk profile. The higher your score, the lower the risk it is to the lender. Accordingly, the higher your score the easier it is to borrow larger amounts at lower rates.
The best and easiest method to improve a credit score is by the use of credit cards. If your credit has not been established or you have recently gone through a debt restructuring an excellent option is to get a secured credit card. This involves putting down a deposit and using the card to pay for items each month. As long as you pay your balance off completely each month, and on time it will get recorded positively on your credit record. If you can get two credit cards recorded each month, it is even better. Remember though to never let your balance rise above 75% of the limit.
If you are troubled by excessive debt levels please don’t put off dealing with it because you are worried about the impact on your credit rating. Here at 4 Pillars we are the leaders in reestablishing good credit through strong affiliations with companies that offer excellent products.
If you are considering a debt restructuring plan and want to know the pros and cons of how it affects your credit please read this article located here [insert article from other office.
If you want to get rid of your debt problem, learn to manage and save for financial freedom please call Laurence Herzenberg at 289-803-6314 or visit my 4 Pillars Newmarket Website and we will go over a detailed plan to reach your goal.
