Hello Anon,
Thanks for the question!
Good job on putting aside 10k of savings and being free of debt!
Yes, you should get a credit card for three reasons:
Credit Score: When you apply for loans in the future, the banks will look at your credit score before they grant you a loan as they want to assess your creditworthiness and ability to pay off loans.
Consumers with a long and good credit history will be viewed more favourably than consumers with little or no credit history.
The consumer with a good and long credit history is viewed more favourably than consumers with little or no credit history.
More specifically, the last 12 months of your account repayment conduct will be used to compute your credit score.
This is why it is good to spend responsibly with a credit card and make your payments promptly to build up a better credit score.
You might want to read this article if you want to find out more credit reports.
Rewards: In general, how the credit card industry works is that the credit cards charge merchants a commission for each transaction. A part of the commission goes towards the rewards given to customers.
This is usually priced into each product that you buy so if you are paying cash, you are subsidising other people's credit card rewards. This is also why some stores charge you extra if you pay with a credit card or choose not to have credit card payment at their store.
Rewards (Pt. 2). As for the rewards that you are enjoying, you can choose from cashback, miles or rewards. Here is an article detailing the differences:
All this is well and good. But, you will need to be disciplined as well. Train yourself to pay off your credit card debt on time as the interest (~25% p.a.) and late fees are a killer.
Also do not put too high a limit so that you will not be tempted to spend beyond your means.
A good rule of thumb I follow is to not buy anything with a credit card that I do not have the cash to pay off.
As for investing, there is no best way to invest as everyone's financial goals and needs are different. This is why it is called personal finance.
But, here is a good place to start.
All the best!
Hello Anon,
Thanks for the question!
Good job on putting aside 10k of savings and being free of debt!
Yes, you should get a credit card for three reasons:
Credit Score: When you apply for loans in the future, the banks will look at your credit score before they grant you a loan as they want to assess your creditworthiness and ability to pay off loans.
Consumers with a long and good credit history will be viewed more favourably than consumers with little or no credit history.
The consumer with a good and long credit history is viewed more favourably than consumers with little or no credit history.
More specifically, the last 12 months of your account repayment conduct will be used to compute your credit score.
This is why it is good to spend responsibly with a credit card and make your payments promptly to build up a better credit score.
You might want to read this article if you want to find out more credit reports.
Rewards: In general, how the credit card industry works is that the credit cards charge merchants a commission for each transaction. A part of the commission goes towards the rewards given to customers.
This is usually priced into each product that you buy so if you are paying cash, you are subsidising other people's credit card rewards. This is also why some stores charge you extra if you pay with a credit card or choose not to have credit card payment at their store.
Rewards (Pt. 2). As for the rewards that you are enjoying, you can choose from cashback, miles or rewards. Here is an article detailing the differences:
All this is well and good. But, you will need to be disciplined as well. Train yourself to pay off your credit card debt on time as the interest (~25% p.a.) and late fees are a killer.
Also do not put too high a limit so that you will not be tempted to spend beyond your means.
A good rule of thumb I follow is to not buy anything with a credit card that I do not have the cash to pay off.
As for investing, there is no best way to invest as everyone's financial goals and needs are different. This is why it is called personal finance.
But, here is a good place to start.
All the best!