You might have heard of some people who end up racking with high debt using a credit card. But, what are the reasons to use a credit card then? It is because this is not what having a credit card is actually like. Credit card debt is what you should avoid and not credit cards. If you know how to use credit card wisely, it can be the greatest financial tool you have. Still, you can think about why to use a credit card when you have other easy options like cash & debit cards to pay for your purchases.
Making purchases is not the only thing you can do with your credit card. You can save every time you spend, you can get extra benefits like life insurance, medical insurance, etc, you can build your credit score and the list goes on. Following are the 10 most significant reasons to use a credit card:
1. Financial Stability
With a credit card, you can make purchases even if you don’t have that sufficient balance in your account as you have the option to pay later for it. It is the easiest way to borrow with a credit card if you have chosen the right one. So, if your friends make a sudden movie plan or they plan an instant trip, you don’t need to worry about the amount in your bank account. You can just swipe your credit card to book movie/flight/hotel tickets and enjoy yourself with your friends. Hence, a credit card can provide you with financial stability and allows you to spend without thinking twice when it’s necessary.
2. Build Your Credit Score
A credit score is something that plays a huge role when you apply for a credit card or a loan. The credit score depends on your credit report, which contains all the information about credit cards & loans you’ve applied for and how responsibly you paid them. Using your credit card responsibly can affect your credit score in a very positive manner, and hence you can get higher loan amounts at low-interest rates. However, using a debit card doesn’t affect your credit score in any manner. Therefore, using a credit card can be really helpful in building a strong credit score.
3. Easy & Safe To Carry Around
It is far safer to carry a credit card with you than to carry cash when you go out. If you lose the cash, there is no way to recover the loss. But, in the case of a lost credit card, the loss belongs to the card issuer. You just need to inform the loss to the bank and your card will get blocked or the bank will be responsible for any unauthorized transactions made on it. Carrying a credit card is easier as well as you can just swipe it to pay unlike that in the cash of cash, which you have to count every time you pay.
4. Rewards & Offers
Almost all the credit cards come with great reward programs & cashback offers to let you save on your purchases. Credit cards offer you reward points, cashback, Airmiles, etc every time you spend, and you can use these rewards for various purposes like shopping, flight/hotel bookings, cashback, etc. Other than these regular rewards, you can earn additional reward points as a welcome benefit, milestone benefit, and several other offers launched from time to time by credit cards. Hence, unlike purchases made through cash, you can save amazingly on your purchases made using your credit card, which is one of the most significant reasons to use a credit card.
5. Protection Against Fraud
Protection against fraud is provided by all credit cards, which means that the cardholder is protected from any unauthorized transactions made on his/her card. If your credit card is lost/stolen, you don’t need to worry. Just inform the loss to the bank/card issuer or get your credit card blocked immediately. After reporting the loss to the bank, you will not be liable for any fraudulent transactions made on your card.
6. Universal Acceptance
Most of the rental car companies or hotels want their customers to pay using a credit card as they place a hold of some hundred dollars on your card which might be inconvenient in the case of a debit card. Moreover, when you travel to a different country, your credit card can be your best friend as you can use the lower foreign currency exchange rates on your credit cards unlike that of the higher exchange rate for cash.
If you check the detailed terms & conditions of your credit card, you will find that the card has come with some additional benefits that you didn’t even know. Most credit cards provide life insurance, medical insurance, or travel insurance to their customers in order to make you feel secure about any emergency conditions. As accidents can not be predicted, the insurance covers provided by a credit card can be a lifesaver in such situations.
8. Purchase & Travel Protections
Credit cards also come with exclusive purchase protection covers to save their customers from any loss due to a wrong/damaged purchase. If you have bought any item using a credit card and later you find that it is damaged or not working properly, you can return it and get your amount refunded. Some credit cards also offer extended warranty on electronics and other items that are expected to be used for a long time. The warranty period can even be doubled using a credit card in some cases. The only thing you need to do is: keep your receipts and be aware of such offers on your credit card.
9. Built-In Grace Periods
Most credit cards come with a grace period of 30 days or less, which means you are charged no interest for the purchase you have made using your credit card. You can avail of the maximum benefit using your credit card if you arrange the debt amount within the grace period or zero-interest period. Even if you can’t pay the full amount, you should try to pay the maximum out of it in the grace period & then the rest can be paid every month with a fixed nominal interest rate.
Also Learn: What is the Grace Period on a Credit Card
10. Balance Transfer
Credit cards also allow you to transfer your debt from one card to another. So, if you own debt on a card with a high-interest rate, you can transfer that debt to a card with a lower interest rate. It is obvious that you’ll have to pay your debt, but paying it back with a lower interest rate can save you a lot.
With so many advantages of using a credit card, you should now think of having a card if you don’t already have one. But, just make sure to pay your bills before the due date to avoid high debts. Moreover, you also need to read the detailed terms & conditions of a credit card before getting it issued to know all its fees & charges, eligibility, and benefits. You can compare different cards & choose the one that suits you best. If you can do so, there is no reason not to use a credit card as it will not only make your transactions easier but will also let you save on all your expenses.