A huge part of adult life deals with money matters. When you were younger, you aspired to get the job that you wanted and happily earned from it, but it is not as simple as that. That picture does not show the more challenging side of finances, like having bad credit affecting personal loans or getting mired in debt. These are some of the potential pitfalls of borrowing money. If you indulge too much in it, you may find yourself in a predicament later on.
When done right, borrowing from a financial institution such as a bank could work wonders. For example, if you are looking to jump-start your business that you are positive would make a huge impact on the market, you will not want to wait for you to save up the cash for that. You can take a title loan that places a lien on your possession such as a car. The good thing about it is that it would not have an adverse effect on your credit score. Credit cards are also an option. But some people are wary of getting credit cards because they know that they might not have the discipline to use those cards responsibly. While that is a fine reason, there are other important reasons for having one:
It Helps Manage Your Cash Flow
Cold hard cash is always the way to go when it comes to no-fuss spending, but you want to hold on to it as much as you can. Not all establishments accept other modes of payment. That is why it is ideal for you to have some reserves in your pocket.
Spending using your credit card allows you to manage your cash flow so that you can use the money later on when you need it the most. There is a big difference between paying $1,000 for an item using cash and credit card. The former requires you to drop that full amount in one transaction, while you can spread it out according to terms for the latter.
A lot of banks right now offer rewards for people who often use their credit cards for transactions. They can accumulate points that can be exchanged or used as discounts or flight miles. It is nice to get something back after all the spending, but you should not use this as an excuse to do more shopping. Those rewards are not personal targets that you have to hit. Remember that you have to spend more to get them, so it is best to treat them more as a bonus.
Portable and Traceable
It is too easy to go to a store and pull the trigger on various purchases just because you have a credit card. But what happens when it gets stolen? Someone else can do the same mindless shopping at your expense. But the good thing is that you can report a lost card as soon as you figure it out. This will effectively cancel it and prevent anyone from using it. If there are some successful transactions during the shuffle, the trail can be traceable. You will know when and where those are done, which can give you a good idea of where the culprit may be.
Credit cards are not that bad at all. It takes discipline and maturity for someone to use it properly. But if you know how to keep tabs on your spending habits, having one can be a great help to your life.