What comes to your mind when you heard about credit cards? My past school experiences had led me to have a very negative impression about credit card.
For me, credit cards are devils’ tools that would cause me debt. I even strongly refused the promotional phone call from the bank which wished to offer me my first credit card.
On top of that, I hated the idea of using a credit card to the extent that I simply put aside the credit cards delivered to my doorstep. I insisted as I did not wish to be enslaved by money.
The Truth Behind the Myth About Credit Cards
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What made me change my mind then? The key of change lay in the housing loan.
My husband and I needed to borrow a housing loan from the bank to buy our first house.
Only then, I realised that I needed to build my credit score for the ease of borrowing a loan from the bank.
And one of the simplest ways to build my credit score was to use credit cards and pay the monthly expenses on time.
As I started using credit cards, I realised that these cards were merely tools for payment.
They were the devils’ tools only when we use them like one.
The key to using credit cards wisely is to educate our children, especially teenagers, on financial management and literacy.
Instead of brainwashing our teenagers on how horrible credit cards are, it is time to tell them the pros and cons of using a credit card.
4 Facts Our Teens Need to Know About Credit Cards
#1: A credit card can help you to save money
Using a credit card will never put your money to waste.
In fact, you can save more if you use your credit card prudently. Depending on the features of a credit card, you can enjoy cashback on different daily purchases.
For instance, you can enjoy up to 8% to 10% cashback daily on dining and groceries with your credit card.
Some even provide cashback for petrol, electronic wallets and even e-hailing services!
Since we can save more with our credit card, why are we still educating our teenagers that they will stay broke if they use credit cards?
In fact, there are more reasons for us to use a credit card.
#2: A credit card offers safer purchasing
As the trend of online purchasing is becoming the new norm during the COVID-19 pandemic, the cases of online fraud and scam shoot up at the same time too.
Individuals have suffered from the sudden loss of their savings after their online transactions with internet banking, debit cards and even electronic wallets.
Is there any solution to prevent ourselves from becoming the victims of fraud while we can still enjoy the perks of online shopping?
Yes, there is! We can use a credit card to process our payment.
Unlike internet banking and debit cards which are directly linked to our banking accounts, our credit cards do not contain any details about our banking accounts. This will help us to secure our banking details.
Furthermore, credit cards do not directly deduct the amount of our payment instantly as in using debit cards and internet banking.
We can first look through our monthly statement to see whether there is any additional payment or fraud that existed in our payment.
We can then proceed with our monthly commitment to pay our monthly expenses.
While telling our teenagers about the safety which a credit card provides them, it is equally important to educate them to pay out their credit card expenses monthly on time to avoid additional interest charges after the expiry date and to have good credit scores.
Having good credit scores is crucial as it shows how creditworthy you are.
With this, you will be able to get a loan from the bank easily and quickly as the bank knows that you would most likely to repay loans in a timely manner based on your past repayment history.
#3: A credit card enables you to accumulate reward points for redemption
What makes a credit card to stand out from a debit card is that you can accumulate reward points if you pay with your credit card.
You might be wondering what you can redeem with these points. Here are some redemptions that you are entitled to with the reward points.
You can redeem your points for cash rebates during your purchases.
For instance, some banks offer 400 points for RM 1 rebate at their selected partner store.
Moreover, you can accumulate your reward points to redeem products such as electrical appliances, daily items, and even luxury items.
You can also have alternatives such as partial redemption where you redeem some of your points and pay the remainder to own the item.
#4: A credit card provides convenience for cashless payment
How many options do we have for cashless payment nowadays?
Internet banking, debit and credit cards and electronic wallets are available to name a few.
While internet banking and electronic wallets require an internet connection to process our payment, debit and credit cards are more convenient to be used for our daily purchases in stores.
Simply by entering your password or using the payWave feature, you can now enjoy your grocery shopping with convenience.
You can also purchase items with huge amount of money such as furniture and electrical appliances without concerning about the danger of bringing along too much cash.
You no longer need to deal with the hassle of pulling out notes and keeping the change into your wallet before exiting the store, especially when you are in a hurry.
No More Bias About Credit Cards
With the prevalence of online purchasing, we should really look into educating our children, especially teenagers on how to use the payment tools such as credit card wisely.
Merely stopping them from using the credit card will not prevent them from becoming broke as anyone who is financially illiterate will eventually become broke with any payment tool.
So, let’s say YES to educating financial literacy and using a credit card!