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Top Reasons Why Credit Cards Are Better Than Cash

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Did you know paying for your purchases with a Credit card can be better than using cash? From convenience, safety and the many extra benefits, read on to know why many prefer paying with their credit cards than with cash.    

How Do Credit Cards Work?

Before we get into reasons for using credit cards as a safer payment method than cash, let’s look at the basics of how credit cards work. Credit cards made its debut in the 1950’s when the first general purpose credit card, BankAmericard was introduced by Bank of America. Since then, it has been a popular method of payment, however throughout the years, credit cards have received a lot of negative coverage as a result of frauds and credit card scams.

Put simply, a credit card is a service provided by financial institutions allowing the card holders to borrow funds from them. . However, the borrowed money needs to be paid within the agreed amount of time, or else you will be charged a high interest. In Malaysia, the agreed amount of grace time is 20 days. A concept which many people are yet to understand well.

47% of Gen Y’s are reportedly tied up in expensive credit card borrowings as stated in the Finance Matters: Understanding Gen Y report by the Asian Institute of Finance. The report also stated that 70% of Gen Y who own credit cards tend to only pay the minimum monthly payment, while 45% do  not pay their debt on time.

From those findings, we can see that an alarming number of people are not using credit cards the right way. So, before you decide to use credit cards, over cash, be sure that you can make prompt monthly payments above the minimum amount.

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Why Are Credit Cards Better Than Cash?

Safer to carry around

In the event that you lose your cash or it gets stolen, the chances of getting your cash back is slim to none. However, if your credit card is stolen, you have a better chance of exercising damage control. First, you should immediately report it stolen or missing, and then block the card from being used. But even if the card was used for a fraudulent purchase, you can still be protected.

Bank Negara’s credit card guidelines under clause 13.2 states card holders do not need to pay more than RM250 for lost or stolen credit card transactions. But do keep in mind that you will have to make sure you report it once you notice it stolen as the clause also states that “provided the cardholder has not acted fraudulently or has not failed to inform the issuer of credit cards as soon as reasonably practicable.” You can also dispute charges if your credit card was stolen or fraudulent charges have been made to it by submitting a dispute charge claim to your credit card issuer.

A better option when traveling

Travelling to a foreign country where you may not even speak the local language could pose inconveniences. You may encounter communication problems as a result of the language barrier or you may even be tricked when paying with cash as you are not familiar with their currency denomination. It is advisable for you to carry minimal cash when traveling and instead use your credit card to enjoy secure and protected transactions.

It will offer you convenience and you will also be raking in points as overseas charges to your credit card will get you more points than local transactions do. It will also save you from the hassle of bringing home excess cash from countries which you won’t be travelling back to anytime soon.

Convenience

Paying with a credit card means you won’t have to carry a large amount of cash with you, especially when making big purchases. But that’s not all, with your credit card you also get to make big purchases and spread out the payment without having to pay any interest through instalment payment plans. Learn how you can take advantage of instalment payment plans to help you make bigger purchases with ease.

Paying with credit cards will also help you with record-keeping. You can track how much and when you spent money thanks to your monthly statement and internet banking.

Extra Benefits

For starters, most credit cards offer either cashback or rewards points, so you can actually save money from the cashback you earned and by using points to redeem items or even cash vouchers. Many credit cards also offer you discounts at restaurants and hotels.

If you hold a premium card, you’ll get extra perks like travel insurance coverage, airport lounge access, and you can convert your reward points to air miles to get free flight tickets!

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Tips To Maximise Your Credit Card Security

Stay Up-To-Date

Frauds and scams usually put people off from using a credit card.. But you can use it with peace of mind. First, you will need to ensure that you have already upgraded your card to the latest PIN enabled card. Here is an article to know more about PIN enabled cards and what you need to do.

Next, make sure you immediately sign the back of your card once you receive it. Then once your card expires and you get a new one, cut up your old cards across the magnetic stripe before disposing or returning it to the bank as the most sensitive information are stored in the magnetic stripe.

Don’t Entertain Calls or E-mails from “Banks”

Most times, banks call you when you make a large purchase with your credit card to ensure it is not a fraudulent charge. Bank Negara or your issuing bank will not call you to ask for your credit card details, especially the 3 digit code at the back of your card. If  you do receive calls from individuals claiming to be officers from Bank Negara or banks to verify your credit card details, DO NOT give out any information.

The same applies if you receive suspicious e-mails from your bank. Do not reply and do not click on any links within the e-mail. It could be a phishing e-mail which was made to look like it was sent out from your bank and directs you to a link to gather your personal and financial information. If this happens, delete the e-mail and report it to your bank.

Be alert

When paying with your credit card, if it needs to leave your sight for example when paying at a restaurant, always check your credit card once it is returned to you. Make sure it is yours as it could have been swapped for another expired card, which is a common modus operandi for credit card theft. Always keep your transaction receipts until you receive your monthly statement so you can cross check your bill and it will be easier to clarify any dispute charges.

See also:  The Best Credit Cards in Malaysia 2016

The post Top Reasons Why Credit Cards Are Better Than Cash appeared first on Financial News, Reviews and Advice.



This post first appeared on CompareHero.my Financial News And Advice, please read the originial post: here

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