During the holiday season, have you seen those debit card infomercials? They basically demonize credit cards and saying how dangerous if you use your credit card, it’s like no. Here are five reasons why credit cards are much better.
Reason No.1, why you want to use a credit card and that is you can leverage other people’s money. You see, this is saying that cash is king. In business, you can survive a long time without making a profit, but you will not survive a day without cash. Companies go out of business because they run out of cash. When you use credit card, you essentially borrowing money from the credit card company. So when you use your debit card, the minute you use that card that money is gone from your bank account, but when you use your credit card, assuming you’re paying off the balance every single month, you’re leveraging the the credit card companies money. It is a small thing to do because their period of time, a lot of people, a lot of entrepreneurs, even when they were getting started, guess what? They started off, borrowing money from their credit cards to make their first initial investment to get the business going, to get the investment going on, sometimes to just help them get over that period of time. I did that for a few times. So that’s reason number one why you should use a credit card.
Reason No.2 to use your credit card is you can borrow money for free, as long as you’re paying off the balance every single month. A lot of people disorder credit cards because they’re think I’m going to go pay interest, I’m going to get into credit card debt. What has nothing to do with the credit card is to do with how you manage your money. And if you have any self discipline, it is just like a pencil, right? You can use a pencil to write beautiful poem, you can use the pencil to write a song, you can use the pencil to step someone like John wake, right? Kill three men with one pencil, you could do that to. It’s how you use it if you have the self discipline to pay off the credit card every single month. There’s nothing to worried about and if you all worried about it and sometimes you you’re afraid I might forget. Set a date, put it in your calendar, put it on your iPhone, so you’re paying off the balance every single month, don’t worry about it. So even for example, you are somewhere and you’re traveling, you need your car towed, maybe you don’t have that money right now before the next paycheck, what do you do? You are in the middle of nowhere, right? And you don’t have enough money in your bank account to use your debit card. This is a moment that you could use your credit card, take care of that, get the cartoon, then you’ve got a few weeks to solve the problem, waiting the next page comes and boom. Now you can pay their off as long as you pay their off and not just making the minimum payment, you are OK.
Reason No.3, to use your credit card is you build up your credit score. One of the most important things that most people overlook and you don’t think about is your credit score. Why is this important? Because when you are now having a family, when you want to buy that home, when you want to get that mortgage, the bank will look at your credit score. That’s your credibility, right? That’s your borrowing power. You need to build that up at a young age. You need to build up your credit score and having a credit card and pay that off again on time and not late, you build up your credit score. So a credit card and multiple credit cards use wisely to build up your credit score. A debit card cannot do that. A debit card cannot do that if you are a business person, if you’re thinking of raising capital, borrowing money from the bank, get a car, all of that the banks will look at your credit score. It is how we live, right? This is how we do credibility in North America. It’s very, very critical. It’s better to do that when you’re starting at a young age building up the track record. Does that make sense?
Reason No.4, why you should use your credit card if you get rewarded. Now there are many forms of credit cards. There’s so many different credit cards of their options. Some of them they offer cash back, meaning for extra mythology spin they give you a tiny bit of cash back. You’re getting paid extra to use your credit card. Why did the credit card companies do that? Because they want to encourage you to use the credit cards. Now they’re counting on you to actually just make an entertainment and write up the interest rate. But if you are a phenomenon, you are smart, rather than that, I believe you have the self discipline. Now there are also other credit cards that offer you reward points or travel reward points, right? Those are very, very good because they say with my company I have multiple credit card within a company and some of them are travel caught. So we accumulate a a lot of those points that we could utilize when we are travel, when we are staying in hotel, when we are using it to buy a flight ticket when we are using it to buy even a computer. I will not get any of that if I’m just using a debit card, especially if we have any kind of volume example, if I use my aim at, then I could go to the airport now to enjoy free access. There are a lot of perks. debit card doesn’t offer that.
Reason No.5, why you should use your credit card is you are better protected. Now this just recently happened to me that I got a call from my critical company from the 4th prevention department saying that someone has been using my credit card in another country. What they did is they immediately stopped the credit card and they issued me a new one and then through a process, they also give me my money back, stop that forge activity. Now that’s fraud prevention. A lot of other credit cards they also come with insurance protections that when you’re traveling, depends on what card you use get extra protections for that as well. With a debit card, you don’t get that. If someone stole your debit card and assuming they know your pin number, when they took money out of your bank account then money is gone. It is gone forever. But with a credit card, you can then contact the credit company, you can provide evidence and say, hey, what these are charges were not done by me, it was done by a criminal and they would investigate. And if you prove your case and they would say no problem, you have your money back and then you have a new card that’s pretty powerful.
So those are the five reasons why I believe only idiots use debit cards and why credit card makes sense. Common below, let me know which reason resonates with you and do you use your credit card wisely, not getting into debt, but use your credit card wisely.
