Why Credit Cards Are Necessary Evils

I got my first and only credit card when I bought my car in 2008. I was avoiding credit cards for a long time until I was attracted by the 3% rebate from Petron-BPI credit card. I figured that I will be getting a good deal with all the gasoline I would need to buy from that time on.

You know how credit cards have notorious connotations to many people. It’s a debt trap waiting to happen. Warren Buffett advised cutting credit cards into pieces. We hear horror stories of people buried in credit card debt with little chance of getting out. These people ultimately default on their debt and hope to God that credit card companies wouldn’t go after them. 

The Essential Plastic
But in this age of the World Wide Web, credit cards have become a need instead of an alternative. From its humble beginnings being a payment mode for gasoline in order to take advantage of rebates, my credit card has grown its usefulness. It has become essential in my business travels and online transactions. 

Nowadays, air tickets are sold and bought online. Sometimes the airline company will not even bother to put up a sales office locally which means buying ticket online through credit card is the only option. Whenever I book a hotel, credit card information was asked to confirm the reservation. Otherwise, hotel accommodations will not be guaranteed upon arrival. That’s not an option if you don’t like sleeping on the streets.

When I bought my domain names for my two blogs, I used my credit card to do it. While staying in Malaysia for a couple of weeks, I bought Skype credits to be able to call home using my credit card. I have also opted to pay recurring expenses like life insurance premiums and phone bills with my credit card. Through my credit card, I was able to donate money to UNICEF to help Filipino children in need

Rules of Thumb
With all these transactions, I have developed my own rules to follow so that there’s little risk of falling into too much debt and even save some money
  1. I always pay in full before due date. I have never paid any interest for my credit card usage ever. 
  2. I don’t use my credit card if I can pay in cash.
  3. I always check all the charges before I make the payment.
  4. With my excellent credit standing, I have always asked and been granted a waiver on the annual fee.
Wrong Charges & Security Risks
There were just two instances when my credit card became a problem. The first one happened when a Holiday Inn hotel charged me with 7000 plus pesos of “no show” fee. I found out later that our travel personnel did not cancel the booking she made when I told her to. It was her fault but she was able to convince the hotel to waive the fee eventually. 

The second incident happened just a few days ago when someone hacked into my Skype account. The hacker bought 35 US$ worth of Skype credits to make multiple calls. I was lucky to catch it immediately or else the charges would have been a lot more. I learned from that day on to erase my credit card records in all of my online accounts. This way, even if the account was hacked there’ll be no credit card information to use. 

Adapting to Changes
The modern age of the internet has changed the way we do things. Credit cards have now become an essential tool for online transactions. Surely there are risks that we need to be vigilant about regarding the information we provide on the web. But there are steps that we can take to lessen the vulnerabilities that we have on credit cards. Taking those steps would put us in a better position to use credit cards more effectively.

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