Debunking credit card myths in Ghana – Muhammad Shamsudeen Ibrahim writes

Credit cards are often misunderstood in Ghana. Many people associate them with high interest rates and hidden fees. This leads to limited use, and some avoid them altogether. However, much of this hesitation comes from misunderstanding rather than misuse. Credit cards can be practical tools for managing short-term expenses when used responsibly.

Myth 1: “Credit cards are only for the rich”
Many believe credit cards are only for wealthy individuals. This idea comes from selective marketing and limited education. In reality, credit cards serve a wide range of customers. They include salaried workers, self-employed professionals, and business owners needing flexible credit access. Eligibility is based on income and repayment ability, not social status.

Myth 2: “Credit cards always lead to high interest”
Some think using a credit card means incurring interest charges automatically. This belief discourages many from applying for one. The truth is that interest applies only if the full balance isn’t repaid within the interest-free period. For example, Absa Bank offers up to fifty-five days of interest-free spending. If you repay within this time, no interest is charged.

Myth 3: “Using a credit card will land you in debt”
Another common belief is that owning a credit card leads to debt. This perception arises from stories of others struggling with repayments. However, a credit card itself does not create debt; it’s how it’s used that matters most. Timely repayments mean no interest charges or carried debt. Setting limits and avoiding impulse purchases can help maintain financial discipline.

Myth 4: “Other options are always cheaper”
People often assume personal loans or salary advances are cheaper than credit cards. While this may seem true initially, actual costs depend on usage and repayment methods. For instance, Michel took a short-term loan but paid extra in interest fees within thirty days. A colleague who used a credit card paid no interest by repaying within the free period and earned cashback instead.

Myth 5: “If I do not have cash now, I must miss the deal”
Many believe they must wait if they lack immediate cash for an opportunity. This mindset can lead to missed deals during promotions or sales events. For example, Derrick wanted to buy a freezer but didn’t have enough cash at first. By waiting until payday, he lost out on the discounted price when it returned to normal later.

Credit cards offer unique features compared to other borrowing options. They provide access to revolving lines of credit that restore as you repay what you owe. Unlike fixed-term loans, they allow ongoing access within approved limits.

Additionally, many credit cards come with an interest-free period of up to fifty-five days depending on billing cycles. When used wisely for planned spending and fully repaid during this time, no additional costs arise.

Many also offer rewards like cashback on everyday transactions which can add value over time without changing spending habits significantly.

To use a credit card wisely:
- Plan your repayments before spending.
- Use it for routine expenses like groceries or utilities.
- Pay off the full balance before due dates.
- Take advantage of cashback rewards without relying solely on them.
- Consider using it for unexpected expenses while planning immediate repayment.

Rethinking how we view credit cards is essential in Ghanaian finance discussions today.
They should not be dismissed due to misconceptions or negative experiences shared without context.
With proper understanding and responsible use, they can effectively manage short-term expenses.
The focus should shift from fear to knowledge about their benefits when used intentionally.