Thirty years ago, you did not need one. Cash was king and debt…well debt was not something the Baby Boomers were all that big on. But times change, and when the internet started finding its feet, what was a credit card evolution became a credit card revolution. Nearly overnight, the once optional credit card became a necessity.

Although you often hear people griping about the pitfalls of credit card debt and complaining about the escalation of interest rates on their cards, those very same people will – more often than not – be the first to point out to you that the benefits of having a credit card far outweigh the potential risks.

They are not far off the mark. There are a number of very valid reasons for using a credit card. Here are some of these:

When you apply for financing, such as a mortgage, from your bank or a non-bank lender, they will request your credit report from one, or more likely both, our local credit bureaus. Your credit history comprises of approximately 15% of your total credit score. If you have no credit history, you could be declined or, at best, subject to a higher than normal interest rate. The reason for this is that your risk profile will be higher. A credit card can be very helpful to build your credit history. Your spending patterns, your reliability in respect of making the payments on time and your diligence in paying off the entire debt will all be placed on record when you use a credit card.

Planning a trip can be a burden and, in some cases, more expensive if you don’t have a credit card. You will need it to make the online bookings of your flight, hotel, transfers and rental car. This normally works out a little cheaper than booking through a travel agent. You may also find that some of the accommodation sites run specials, which are reserved for online customers only. Where flights are concerned, if you book your airline ticket online, you will immediately be issued with an e-ticket and be afforded the convenience of e-check-in, besides.

A credit card is a revolving line of credit that serves as an instant source of financing without the pain of loan application paperwork and the implications of a credit enquiry. If it is a cash flow crisis, you can draw the cash needed to tide you by from an ATM or over the counter at the bank. If, on the other hand, it is a high value item you need to purchase when your cash reserves are low, you can make the purchase with your credit card.

Using a credit card allows you to shop over the phone and on the internet. Not only will you gain access to an unimaginable variety of products and services, but you are also likely to find the pricing more competitive than your local shopping mall.

Carrying a credit card – believe it or not – mitigates a couple of very real risks:

• Given the crime situation, you do not need to face the risk of carrying cash unnecessarily.
• If you lose cash, it is gone. If you lose your credit card, it gets replaced.

Your monthly statement can be a useful resource when you are trying to control expenses, or when you compiling or fine tuning your household budget. Your statement will normally contain all the charges that you have made against your credit card account, thus helping you to keep track of where your money went.

Not holding a credit card can be economically debilitating and personally frustrating. Considering the selection of credit cards on the South African market, and that the issuers are competing hard for your business, there simply is no reason for you not to enjoy the convenience of having this piece of plastic in your pocket, today.