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Opinions of Friday, 25 January 2019

Columnist: Emmanuel Nii Odartey Lamptey

The benefits you didn't know credit card had

It is almost a nonstarter to talk about money in January because of empty pockets and bank accounts after the holidays. At the same time, however, January is a good month to have some financial education because it is a time when many people plan their finances and most importantly, it is the time when people need some cushion to pad them over the lean period after the holiday spend.

Towards the end of last year, we began a series on credit cards with the aim of demystifying that financial instrument and its usage. While we make our personal financial projections for the year and look for ways to keep afloat financially, it is important to consider the benefits one stands to gain from using credit cards.

Convenience

One of the most used why’s is the convenience. You don’t need to have cash on hand every time you step out. Credit cards act like short term loans. As compared to debit cards, where your card is linked directly to your checking account, credit cards do not require any such linkages thus they afford you the opportunity to spend money you physically don’t have but have access to. For instance, you are expecting your salary in a few days, but you need to make a purchase or payment immediately, a credit card on hand affords you that opportunity to do what you need when the cash is unavailable.
On the back of convenience are cash advances and withdrawal benefits /opportunities. You can get money when you need it. Be aware that cash advances often have a higher interest rate, so it’s important that you have a realistic plan to pay back those advances as quickly as possible.

Book Keeping

Credit cards also serve as a sort of in built personal finance manager or bookkeeper. Because it lists your expenditure for the month and provides you a monthly email statement and online account, it helps you keep track of what you are spending on and how much. In this sense, it shows you how to be a better manager of your finances. It helps you to reconcile your receipts to the items you have purchase in store and online.

INTEREST FREE PERIOD

A credit card allows you to avoid the payment of interest for POS and Online purchases once you pay the actual outstanding amount in full and on time. As much as possible, cash withdrawals should be kept to emergency situations to minimize interest charged. Some credit card companies give up to 55 days interest free period.

There are certain transactions called quasi-cash transactions, that although done online or at a POS device interest may be charged. Examples are money transfers, betting, purchase of casino chips and forex purchase.

Protection against Fraud

Another reason why you need a credit card is that it offers more fraud protection. There have been many an argument about credit card fraud however with the wealth of scams and phishing attacks that are occurring today, it is reassuring to know that the vast majority of credit cards on the market cover security and fraud protection, keeping your money safe from fraudulent purchases. For example, Visa credit cards have the ‘Verified by Visa’ technology added, Mastercard calls it secure code these instantly protect your account from suspicious purchases. If your card is used fraudulently, please notify your financial institution immediately to suspend the card.
Doing so means you prevent further fraudulent transactions while they sort out a new card for you and the suspected fraudulent transactions. It is important that you update your credit card company with your correct cell phone and email address to enable the financial institution to protect your credit card account from fraudulent activities. This also provides you with the mechanism to receive alerts for all transactions happening on your credit card account.

Safer and Easier Online Shopping

Credit cards also make online shopping safer and easier. For the individual who surfs the shops online for items, either for personal or commercial use, it is easier to transact business with retailers using a credit card. Car hiring services and Airlines require credit cards for the payment of goods and services including certain Hotels. Many credit cards Issuers have protected their cards with layers of security and fraud protection, thereby reducing the risks of money being lost when making online purchases. The card can be used in store for the payment of groceries, appliances, clothing, shoes, food and beverages, etc. by dipping, tapping or swapping at the POS device on the till for free.

Transact in any Currency

As with all cards, a credit card has the ability to make payments in any currency and is accepted everywhere. Depending on which part of the world you are using your credit card, the card can still be used to make POS purchases. The card issuer usually charges you a small fee for currency conversion.
What is apparent here is that using a credit card can be useful if used in the right way. As we gradually move further into the year we hope that you will make the right financial decisions and make the most of 2019. Happy New Year!!!