Why Using a Credit Card Can Be a Good Thing
Sometimes using a credit card can get a bad rap. People may blame credit cards for their debt and over spending and let’s face it, no one wants to think about the damage those high interest rates can do. But remember, those interest rates can only get you if you don’t pay your credit card in full each month.
However, I believe credit cards can be a great tool and using them can be a really good thing if you use it responsibly.
Here are 6 reasons, why using a credit card can be a good thing:
1. Using a credit card establishes your credit rating
Properly using a credit card will help establish a strong credit rating. But, you do have to use it responsibility (basically, paying it off in full each month). Without an established credit rating, it can be hard to qualify for other credit/loan products, like lines of credit, car loans or mortgages. In this case, a credit card can be a great tool.
2. You can earn rewards with a credit card
It’s easy to find a no-fee credit card that also offers rewards just for using it. What can cash give you? With a credit card, you can earn cash back, drug store points, movie points, hotel points, etc. Best of all you can earn air miles that you can use to pay for family vacations! There are so many options. Fine a rewards card that works for you!
3. Credit cards can offer great insurance
Having and using a credit card can provide you with costly insurance for free. Many cards offer some sort of travel insurance or car rental insurance. It is also very common for credit cards to offer a specific insurance which can cover your monthly minimum credit card payment in case you lose your job or become sick. This insurance would come with a fee. However, if you are only spending money that you actually have, this shouldn’t be an issue! I would avoid this type of credit card insurance.
But, having travel insurance or car rental insurance can be really handy. It’s just an added perk!
4. Protection from fraudulent charges and scams
Many credit cards company will cover any fraudulent charges that are made to your card, whether your physical card is stolen is or a fraudster gets a hold of your card information. A credit card can also be a handy tool if a service or product you buy turns out to be a scam. Often credit card companies will often review the scams and refund charges made in good faith. This can really help with peace of mind!
5. Less likely to make small impulse purchases
Using a credit can help you avoid small impulse purchases like treats, make up and accessories or knick-knacks that you don’t need. I find that using a card makes me think twice about something I consider “small” – and some stores, local restaurants won’t accept credit card for small items.
6. Track your spending easily
My favourite part of using a credit card! When you use your credit card, each of your purchases can be easily tracked in Online Banking. I think this is a major benefit – you can quickly and easily see what you’ve spent and where. Many banks can also provide you with category break downs in online banking so you can see what you’re spending on travel, groceries, gas, etc (for example). I prefer to keep track of this myself in my budget.
Can you think of any more benefits to using a credit card regularly?
Photo by Porto Bay Trade via Flickr