Credit cards are one of the most powerful financial tools available, and if you’re able to qualify for the credit, particularly the better cards with amazing benefits, it’s something many people should consider doing.
However, some people who hear the word ‘credit’ think of debt, and then naturally think of people who are unable to make ends meet or who are struggling to purchase certain expensive items.
This however isn’t necessarily the case, and while debt does hang around the necks of many of the poorest and most vulnerable in society, credit cards are also used by rich people.
In fact, rich people are actually more likely to use credit cards than poorer people, and there are a range of very good reasons for this.
In this piece we’re going to look at why rich people use credit cards, and what makes this different from other lenders who are of lower means.
The simple answer is simply because they can! Rich people are the people that banks and lending institutions actually want to lend to because they know that they’re likely to see a healthy return on their credit and do repeat and reliable business with rich lenders.
Another reason is that naturally rich people have more wealth at their disposal, and so are much more reliable and desirable customers as they will have many ways to settle their loans and debts if they should get into financial uncertainty.
The material and liquid assets of rich people make them a sure bet in the eyes of lenders, it is sort of a no-lose situation on their end.
Rich people get a lot out of using credit too.
Rich people will often use credit to pay for things because they understand that having credit and using it responsibly is a great way to improve your financial situation, improving your credit score and allowing you to qualify for more advantageous loans, mortgages, and accounts that will accumulate in various ways to help you grow your finances and become more financially successful.
Another reason that rich people may use credit is that their assets may be tied up in various other non-liquid but valuable commodities, and this could be a range of things from stocks to property or other investments.
This allows rich people to use credit as the cash they spend day by day and grow their own wealth separately, which is a powerful financial tool to multiply and grow personal wealth while also growing a healthy credit score.
Naturally, the key to these types of situations is shrewd financial management, and rich people manage their credit very effectively, which is a key distinction between how rich people use their credit cards and how poorer people use their credit cards.
Finally, rich people understand that spending their own money is a very silly thing to do. They understand that it’s much safer and smarter to spend someone else’s money, i.e, a credit card.
This means that they assume much less risk on various purchases, as they know that should something go wrong, they personally assume little to no risk.
The risk is assumed by the lender, which is one of the most powerful and important benefits of using credit cards and one of the key reasons why rich people like to use them.
It means that should you buy something and it’s faulty, or it gets damaged through no fault of your own, you will have a much better chance of resolving the financial problems this entails in your favor.
The same goes for if you get scammed or defrauded. If you get scammed or defrauded on a credit card, you personally haven’t lost any money!
The lender has lost the money, which often makes them very effective at sorting out issues such as this, and lenders are capable of going to extraordinary lengths to resolve issues like this.
If you are scammed on your own personal account and lose your own money, however, you will often find that your money is much harder to track down and banks are often much less effective at recovering money that’s yours, as opposed to money that’s theirs.
The beautiful thing about this is that you often won’t be responsible for the costs associated with resolving issues like this when using a credit card. Again, all the risk falls on the credit card company.
While there are various specifics and all kinds of different arrangements and agreements, these are some of the key benefits to using credit cards and perfectly illustrate why credit cards and debt isn’t something exclusive to poorer people.
The difference between lenders is how they use their credit, and how they manage their credit.
It’s almost like a game, you can either make the system work for you and use it to get ahead financially, or use a poor strategy and find yourself being manipulated by the system instead of you manipulating it!
There are many nuances to good financial management, and very few people are able to handle this sort of business totally alone.
Most rich people have professional advisers to help them get the most out of their credit, and it’s unreasonable to expect everyone, particularly normal people, to be able to manipulate their finances so beneficially.
However, writing off credit as something bad, something to avoid and be afraid of is something that will make your financial life much harder in the long term. When used correctly, and harnessed, credit is a good thing that can change your life for the better.