Should I have a Credit Card? | JR Prosperity Partners


Read the latest real estate market news, property market trends, investment tips and strategies.

Should I have a credit card?

Are credit cards good or are they evil? 

We often hear debt is a terrible thing and never own a credit card, yet the wealthy all live on credit cards, so what do you do? 

It depends on your situation. 

If you’re wanting to buy a property, we always suggest you either reduce your credit card limit or cancel it all together because when assessing your borrowing capacity, the banks will look at your limit, not how much you owe. They’ll then multiply that amount up to 9x and deduct that from your borrowing capacity. So say, you have a $10,000 limit, the bank will multiply by 9 and deduct $90,000 from your borrowing capacity which really adds up. 

But if you’re wanting to build up your credit or have an active interest in your finances than a credit card is a great idea. By using your credit for all your purchases and ensuring you pay your balance by the due date, you will increase your credit score which helps you borrow. Also, depending on the issuer and if used right, you can accumulate several rewards and discounts to your benefit. 

In fact, that’s why a lot of the wealthy have credit cards, for the benefits but it takes a certain level of discipline to accomplish so if you want to improve your relationship with money, we highly recommend you see advice from a licensed financial professional who will be able to help you. 

Credit cards are great tools when used correctly, but used incorrectly, can place you in a world of pain as well, so please choose wisely.