Study: My Understanding of Finances

Advantages of Credit Cards

Credit cards have become a much-needed convenience in this day and time. Purchasing gas, groceries among other goods and services has been made easier by credit cards. Purchasing other items that require funds that may not be at one’s disposal is also possible with credit cards. One can’t ignore the controversy that faces the use of credit cards. Credit card use sometimes gets out of hand leaving you with dents you can’t pay off. Responsible use of credit cards is therefore necessary. Unlike debit cards where you have your transactions kept to a minimum, credit cards are much better as you can spend on items you very much need. It’s important to remember as you use your credit card, that it is a short-term loan. As a middle-income earner, you may not necessarily find a credit card to be very much beneficial. There are many benefits of having a credit card. There are benefits that you accrue from using a credit card and they will be discussed in this article.

Having a good credit score is very beneficial. You will be able to build a positive credit history with a credit card and in turn have a good credit score. You can establish a credit history by charging small amounts on your credit card and paying them off on time. A credit score speaks to your creditworthiness. You can’t get a loan without a credit history. Credit cards help you build an impressive credit history. A good credit score will come in handy later in case you need a mortgage loan. A good credit history will not only increase your approval chances but you’ll also be able to reduce the rate charged on your interest.

You get rewards like cash back with credit cards. Cash back allows you to get a small percentage of your balance refunded either on selected purchases or irrespective of the purchases. It’s important that you are careful as you may end up spending a lot of money from being tempted by these rewards. As mentioned earlier, credit cards need to be used wisely. You will be able to earn a lot of money with credit card rewards. Other than cash back, credit cards offer other rewards like discounts, gift cards and many more. You get sign-up bonuses from getting a credit card. With a good credit score, you can get approved for a credit card that offers sign up bonuses. Sign up bonuses are in terms of either cash bonuses or a large number of reward points.

You won’t incur losses when your credit card is stolen. Losses from fraud are not incurred with credit cards. When your credit card is used fraudulently, you need to notify your credit card company and you won’t pay for the transactions you didn’t make. Other modes of payment don’t offer the safety offered by credit cards. You’ll get these benefits from the use of a credit card.

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