5 ways credit cards can improve personal finances of young, new earners
Many millennials and young adults eagerly wait for the stage of life when they have their own credit and debit cards, bank accounts, investments and more. As soon as you start working, you automatically become eligible to apply for a credit card. But this also means that you are more prone to accumulating debt, earlier in life and thus jeopardise your finances. Despite this, there are reasons in favour getting a credit card as soon you start working. Given below are five such reasons.
For young earners just starting out their careers, there is often a constant battle between spending and saving, since the remuneration is modest. It is thus challenging to save enough for an emergency fund to deal with any exigencies. This is where a credit card can help. It will not only give you the timely access to money but also a credit free period of up to 45 days during which you can plan for repayment. So even in the face of meagre savings, a credit card can give you the confidence to manage many crucial life events.
Loans are a commonly-used component in personal finance. Be it to buy a house, fund studies or get a car, most people take secured and/or unsecured loans for at least some life or money goal. However, the cost of the loan in terms of interest rate often depends upon the credit score of the applicant. The tool that provides you with better bargaining power, that using which you can demand the best of rates and services, is a strong credit score. A higher score gets you a loan not just easily but also relatively cheaply. When you get a credit card, your credit score will start building.
Many products offer rewards linked to payment through credit cards which you do not get otherwise. These include discounts, cashbacks, vouchers and other offers. Many of these can be availed through credit cards with the same amount of money but change of payment method.
Most credit cards offer a range of privileges such as complimentary lounge access at domestic and international airports, complimentary access to OTT platforms, 24x7 concierge services, access to golf courses around the world etc. Many such privileges come attached with card and you can always pick the one that suits to your lifestyle.
Every time you contemplate spending your money you have to evaluate the pros and cons of using your credit card and understand the net benefit. Responsible use of credit is a critical financial learning which helps you to manage your personal finance in an efficient way. It gives you the learning curve to manage finance responsibly.
