There’s a big debate with credit cards. Is it good or is it bad? Others prefer credit over cash. It’s safer to carry, and credit cards offer perks and discounts in which you can actually save rather than spend more. The other half think credit cards are evil. Your money is eaten up by interest rates, and before you know it, you’re buried in credit card debt. So which is it, really? Are credit cards good or bad? It depends really. It depends on how you view credit cards and how you handle money.

So are you ready for are credit card? If you are, you can use credit cards to your advantage; however, if you’re not ready for one yet, then you might really think plastic is evil. Below, I prepared a guideline you can follow to determine whether or not you’re ready to have a credit card.

You’re ready for a credit card if:

You spend less than you earn

If you always have savings by the end of every month, then that is proof that you know how to handle money. You’re not finishing your salary up to the very last centavo or racking up debt or ‘utang’. You already have the mindset that saving is a necessity, and there’s no need to finish your entire salary. Even better is if you save first before you spend, wherein you automatically transfer a percentage of your income from your payroll account to your savings, and you use the remainder for expenses. Take note though that if you get a credit card, you have to stick within your limit. This means you shouldn’t take away money from your savings to pay your credit card balance.

You can say ‘no’ to impulse shopping

The beauty about credit cards is it makes the shopping experience even better than it already is. Shopping becomes a breeze when you just hand the cashier your credit card, he or she swipes it, you sign, and voila, you can leave the shop with a new item (or more) in hand. This is bad, bad, bad for those who cannot control their spending. You’re not ready for a credit card if you’re susceptible to ‘shop til you drop’ or you can’t say ‘no’ when you see a big red ‘sale’ sign. On the other hand, if you can control your expenses and can walk past a ‘sale’, this is a sign that you have your spending in order and are ready for a credit card.

You’re NOT ready for a credit card if:

You view credit cards as free money

As mentioned above, the use of credit cards improves the shopping experience. It makes it easier, faster, and more convenient to shop. Because of this experience, others may view credit cards as free money. It’s not like debit cards in which the amount you spend is automatically deducted from your account. With a credit card, you don’t have to pay the balance right away, so technically, the Php 1,500 is still there in your account even if you already bought an item worth that much. If you think you’re going to have this mindset, wherein you see yourself paying the minimum required amount instead of the full balance, then you’re not ready for a credit card. You will just rack up interest charges by doing so and treating credit cards as free money or balances that do not need to be paid in full.

You need a card to pay back a debt or buy a ‘necessity’

Another sign which shows that you may not be ready for a credit card is when you plan to use it to pay back a debt or buy a ‘necessity’. Your sneakers broke and you’re thinking you can apply for a credit card to buy a new pair. Where’s the harm in that? You can always pay your credit card balance once you get your salary. If you do this, you’re already taking on debt by borrowing from your future salary. Even if you expect to receive your income by the end of the month, don’t treat money that is still coming as money you already have. Your credit card balance must be paid in full every month to avoid incurring interest fees. You’re not ready for a credit card if you don’t have the money to pay back the balance you will incur when you use it.

Looking for the right one

Owning a credit card is a big responsibility. If you lose sight of your spending patterns and money management habits, your credit card may own you instead of you owning a credit card. This means that you may incur credit card debt, go over your limit, or worse, keep on applying for more credit cards just to keep afloat. The guideline above is a good starting point to determine whether or not you’re ready for a credit card.

In the event that you decide you’re ready for one, keep being responsible and this means to do your research first. Don’t apply for the first credit card you see or the first agent who approaches you. Use the internet first to research which credit card has the lowest interest rate or which offers the features most suitable for you (e.g. miles, cashbacks, dining promos, etc.). To help you with your research, you can use comparison websites, such as MoneyMax.ph, wherein credit cards from different institutions can be filtered and sorted according to your preferences.