My experience on using credit card

If you've been following my blog, you'll know that I've trouble applying for credit cards. It's a miracle that I got the POSB credit card when I applied a few months ago. Miracle because all the other cards have rejected me, despite the aggressive sales person pushing the cards, touting them as free.


After a few months of purchasing things on credit, I have very positive comments about it. I'm sure everyone knows about the dangers of bursting your own credit limits and going into debt blah blah. There are very good things to say about credit cards based on my limited experience.


1. It improves my cash flow.

Interesting isn't it? How can being in debt increase my cash flow? Firstly, you must understand that my work does not give me a nice pay check at a fixed date every month. It comes in bits and pieces throughout the month. Sometimes, because of the amount of money I diverted away from my spending account for savings, I do not have much liquidity to pay for things until my 'paycheck' comes in. Thus buying things on credit allows me to have slightly less than 1 month of interest free money for such spending. I especially like how I can control the date in which I have to pay my bills (of course, I pay in full before the due date), thus offering me a lot of freedom to control my cash flow.


I don't think people with a fixed paycheck will understand fully what I meant, so this advantage of having a credit card is no big deal for them.


2. I get points to offset my purchases.

This is not a big deal for me. Since mine is a POSB card, there are cash rebates for spending using the card. So far, I've got less than $10 rebate after using it for 4 months...really no big deal. Nice to have it, but really not essential. Perhaps after some super big expenditure like buying tons of furniture or wedding banquet, would I realise the benefit of having cash rebates. I'll know it soon ;)


3. Great discounts at selected places

I think this is fantastic. Sometimes, by flashing your cards, you get a lot of freebies that spending cash would not entitle you to have. I am often puzzled by how credit card companies manage to pull off such a deal for their customers and what the restaurants that offer such treats got in return. More business? Either way, I'm not complaining. I'm eyeing the buy 1 get 1 free lunch buffet at the chatterbox to see what the famous chicken rice is all about, haha :)


Of course, this post is not to encourage you to start swiping your cards right now. There are two sides of a coin, and thus a credit card is just like a tool - whether it's good or bad depends on how you use it. To those that have been scared by various literature that having a credit card is very risky and you can go bankrupt - yes, it's true, but it all depends on the user.