Hello and good evening peeps! Have a question here, how does credit card works? And what are the pros and cons of having it? Because up till now I’ve only seen and heard bad things about it.

Simple:

1) If you lost your credit card, and someone use it, or got hack online, you don’t hold any liability, just report and done. But if debit, you suck it up if things happen.

2) build credit score

3) Earn rebate points and discount like petrol 🙃

Con is it might lead you to overspend
Forget to pay back in time will cost u expensive fee

Debit card suck anyway

However you do liable if you did not report on time, for me someone fraud my credit card and took $3000, I have received the message thus able to report to Citibank immediately, they waive it off for me after investigation.

Hey Bal,

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When you get a credit card, the bank assigns you a credit limit based on how safe they feel about your income/other info. So when you pay with it, you're paying with the bank's money first. The bank trusts that you will pay them back. You get charged for the things you pay for periodically in a consolidated statement, which you then get another month to pay off. If you fail to pay off the statement within the given time, you'll be charged an exorbitant interest fee on the balance you don't pay.

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But if you do pay it off, you pay no extra charges. Instead, you'll be rewarded with credit card rewards and a step towards improving your credit score.

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Credit score is basically an indication to banks about how safe it is to lend you money. This comes in handy when you're applying for more credit cards or a loan of any kind (housing loan, car loan, etc). This may make it more likely for you to get loan approvals, a higher loan amount, lower interest rate on your loans, and etc.

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Pros of using a credit card:

• earn credit card rewards like cashback/miles
• improve credit score
• improve cash flow

Cons of using a credit card:

• lead to overspending without proper control
• spiralling debt if you miss/can't make payments

It's a lot to take in, but if you can use a credit card well and control your spending, there are very few cons to a credit card.

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You can check out some posts I've written on my blog to get started if you're interested!

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https://www.thefrugalstudent.com/a-beginners-gu...

https://www.thefrugalstudent.com/credit-score-g...

https://www.thefrugalstudent.com/does-credit-sc...

https://www.thefrugalstudent.com/4-reasons-why-...

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Hope this helps!

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Regards,

thefrugalstudent