Benefits and Challenges about Investing Your Credit Account

A credit card is a bank card that you can use to borrow money and pay it back with interest. It works similarly like a loan, but in this case, you do not receive liquid cash in your bank account. You get a credit that you can only spend using the card. You need to pay what you owe each month.

Just like most things in life, a credit card has its pros and cons. Some people love using credit cards, while others avoid them altogether. Using a credit card correctly can help you build or repair your credit history to have an excellent credit score. Having a good credit score is vital in getting a job, renting an apartment, or taking a loan.

Benefits and Challenges about Investing Your Credit Account by CF Lieu - Certified Financial Planner Malaysia

Advantages of a credit card

If you use the credit card properly, you will enjoy several benefits over using cash and debit cards. They include:

Spreading purchases out

If you have a credit card, you can spread out the cost of a significant procurement like a kitchen appliance over a few monthly payments. This is useful in the event of an emergency that requires you to spend a lot of money, and you do not have all of it at the moment. You can then make regular payments until the debt is paid off.

Get a loan with no interest

Several credit cards offer zero percent interest rate. They let their customers borrow for free as long as they pay the balance in full every month.

Minimizing your debt

If you have a balance transfer credit account, you can transfer existing debts to a specific credit account with low or no interest. That means you can reduce the money you pay on interest, and this will allow you to pay the debt quicker.

Building your credit rating

If you have a limited or poor credit history, a credit builder credit card can improve your financial situation and create excellent borrowing habits. According to the TheCreditReview, credit-builder loans can help you repair or build your credit. You do not need to have excellent credit to get approved. Although credit builder cards can charge higher interest rates, you will not pay interest if you pay your balance in full every month. When you pay off your balance consistently, you will prove that you can responsibly borrow money and repay it.

Receive benefits and rewards

Most credit cards offer varying incentives and benefits. For instance, if you fly regularly, you can take an airline credit card while if you shop a lot of store credit cards or a cashback to be ideal.

Benefits and Challenges about Investing Your Credit Account by CF Lieu - Certified Financial Planner Malaysia

Disadvantages of using credit cards

Limited usage

They can restrict a credit card holder on where and how to use the card. For instance, some credit companies can charge you for withdrawing money or using the card abroad.

Getting into debt

The primary risk of using credit cards is that you can get deeper into debt if you are unable to repay your balance. Some credit cards charge high-interest rates, and the interest can build up fast if you fail to pay off the balance.


If you exceed your credit limit or cannot meet your repayments, they can charge you additional fees. It is, therefore, essential to use the credit card carefully.

Your credit score

Failing to pay your monthly payment in full can affect your credit rating. If your credit rating is low, it’s challenging to apply for another credit card.


Credit cards offer several benefits, including the opportunity to build your credit score. This can happen when you use them responsibly. However, they also have demerits. Some perks of using credit cards like the ability to make any purchase within your credit limit can lead you to spend more money than you have. It is vital to weigh if a credit card is right for you based on your rate of spending, comfort level, and the ability to stay disciplined with your finances.

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