3 Reasons to Go Cashless and Start Using Your Credit Card

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Do you feel the temptation to go cashless and start swiping your credit cards, but in the back of your mind, you’re also apprehensive that it might backfire? Credit card debt is not an easy problem to resolve, and maybe you don’t want to ever start down that road.

How about making your credit card use a learning experience? There are more advantages to going cashless than just ease and convenience, you know.

Build Your Credit History

One big reason to go cashless is because the proper use of credit cards help build a stellar credit history. Credit cards are basically on-the-go personal loans, you see. When you use a credit card, you’re borrowing from your bank or provider. If you can consistently pay them back without issue – no late payments, never prolonging repayments, etc – then you’ll quickly build your credit history into a gleaming polish.

With better credit history comes improved credit score, and that leads to better interest rates and repayment arrangements for future financial needs.

Learn to Macro and Micro-Manage

When people say they’re afraid to use their credit cards, what they’re really saying is they’re afraid they won’t be able to properly manage their finances when they have that piece of plastic in their hand. It’s a given that when you only swipe cards to pay for your stuff you lose an important facet of spending: you don’t see your money actually leave your pockets.

It’s like losing the speedometer of your car. Sure, you can tell if you’re going too fast, but if you need to keep your car at a certain speed, how can you tell without a speedometer? It isn’t easy to tell how much you’re exactly spending when all it takes is a swipe and a signature or PIN.

That’s exactly why using a credit card can teach you not only to macro-manage your finances, but also micro-manage each expenditure. You’ll have to be on top of every receipt and start counting all the decimals; after all that, it’s not that bad —after all, you end up learning how to really control your financial management.

Take Tactical Advantage of Promos and Special Offers

When I say “tactical” here, I mean in terms of advantageous spending. Let’s take a quick example to be more concrete: Let’s say you were out buying groceries, but you don’t have enough cash budget to complete your shopping. Then, you notice a promo at the store that says if you pay using your credit card, you can get a certain discount, plus you won’t pay interests for a full year. Now, let’s also say that if you avail of the promos, you can pay off the resulting bill within a year.

The obvious choice then would be to use your credit card to extend your cash budget, because:

1. You get a discount
2. You can pay the balance before interest kicks in, making the credit card use effectively free of charge 

That’s what I mean by “tactical.”

All of these reasons bolster one another too. When you get good at leveraging your credit cards for promos and special offers, you become good at micro-managing, and you start to build your credit score through better financial management. 

 So what do you think? Maybe it’s high time to go cashless.

This guest post is written by CompareHero.my, the most comprehensive financial comparison service in Malaysia. Compare credit cards, broadband plan, and others at a competitive price.