I'm sure you have heard the horror stories of Credit cards. People in thousands of dollars worth of credit card debt and eventually ruining their credit score is a far too common story in America.
Due to the mistakes they have made, a lot of older people tell you to never get a credit card. They tell you to pay for everything in cash and avoid debt if possible.
While this isn't terrible advice, using a credit card isn't always a bad thing. What if I told you that there are actually advantages to using a credit card?
A lot of people get into a bad financial situation because they are encouraged to spend money they do not have. However, if you are a responsible individual then credit cards can help you improve your financial situation.
Cash Back
The cash-back credit cards do exactly what they say; they give cash back. Certain credit cards will pay you cash on your purchases depending on what you buy.
Essentially, you make a small percentage back on your purchases. These percentages range between 1-6% depending on what you buy.
It may not seem like much, but over time these cash back rewards will add up to a pretty big bonus. Most experts recommend using these cards on common purchases, such as gasoline and groceries.
Bonuses & Rewards
It is very common to receive a bonus for just singing up with a company, especially if you already have good credit. Talk about a welcome gift.
Along with this, companies also offer cash bonuses for spending a certain amount of money within the first few months of opening a card. It is common for these bonuses to offer anywhere between $100 to thousands of dollars. Other companies may offer travel miles, gift cards, or merchandise incentives as well.
Obviously, these bonuses will vary between companies, so be sure to do your research when deciding which one to choose. You want to choose a company that aligns with your spending habits.
Along with this, credit card companies usually have rewards programs that also offer bonuses and incentives. Theses rewards programs typically offer a certain amount of points for every dollar you spend using their card.
As mentioned before, these rewards programs are common for purchases on groceries and gasoline. Once a certain amount of points are accumulated, they can be used to redeem certain rewards that the company offers.
Companies also offer travel rewards incentives such as airline miles and hotel perks. This means that if you spend money in a responsible manner, you can eventually earn free flights and hotel rooms.
Choosing the right credit card can make a difference in your life.
Build Credit
Unlike cash transactions, credit card companies report your payment activity and purchases to the credit bureaus. If you plan on borrowing money in the future, then it is extremely essential to take your credit score seriously.
Credit scores are typically taken into account when trying to get financing for larger purchases, such as a house or a new vehicle. If you have a bad credit score, then it is going to be difficult to get the appropriate funds for these purchases which can ultimately have a negative impact on your life.
The longer and more frequently you use credit cards, the more you will improve your credit history and score. Just make sure to make your payments on time.
Some experts say to use your cards on reoccurring monthly purchases, such as car insurance and cell phone bills. If you are a responsible spender, you can improve your credit score and credit history which will help you with your financial future.
Insurance & Fraud Protection
A major advantage of using a credit card compared to a debit card or cash is the safety it provides on purchases.
If someone steals your credit card and uses it, the money is gone instantly. Any funds used on a fraudulent purchase will be gone, and It is a long and painful process to try and get that money back in your account. Along with this, any reoccurring payments you have will be affected as well due to the fact that you will most likely have to cancel your card.
Conversely, if someone steals your credit card and uses it, the money is not gone right away. Credit card charges are not obtained immediately, so if you notice something suspicious going on you have the ability to notify your credit card company.
Credit Card companies have the ability to put a freeze on your card while they sort out the nonsense that is going on. Some companies even offer zero liability coverage for unauthorized purchases. This encourages consumers to use their credit cards over cash.
Universally Accepted Credit Card
If you have ever been out of the country, you have probably realized that converting currencies can often be a stressful process. Trying to figure out the math and figuring out the prices is a mentally exhausting process.
Using a credit card when you are traveling is a much easier way to go. Rental cars and hotels are much easier to access when using a credit card. Most of them require some type of deposit or hold on the card, so this can be stressful if you are using a debit card instead.
Whether you're going on vacation or on a business trip, you want the least amount of headaches and stress as possible, so using your credit card is the way to go.
Credit cards generally have lower exchange rates as well, and are easily accepted in a lot of foreign countries.
Be Responsible
If you have a good head on your shoulders and consider yourself a responsible person, then there is no reason not to use a credit card.
Credit cards offer a ton of incentives including cash back, rewards programs, and fraud protection.
Stay disciplined, pay your bills on time, and do your research. The combination of all these rewards and incentives give you plenty of reasons to responsibly use a credit card.
