Credit cards can get a bad rap. There are plenty of stories about people who have so much credit card debt that they are drowning in it. Not to mention, interest rates on some cards can be high. Having said that, there are times when using your credit card is a good thing and can actually make your life and your finances better.
Here are some of the top reasons to use your credit card and the benefits of their use:
1.) Receive cash back – Many credit cards offer cash back. Normally, cards offer between 1 and 5 percent cash back. While that might not sound like much, if you use your cards to pay your monthly bills, and then pay off the balance each month, it can really add up.
2.) Credit card rewards – Your card may not offer cash back, but there is a good chance it does offer some reward program. This can be a certain percent off of a category of purchases or even frequent-flyer miles. If you use your card enough, you can find yourself flying to parts unknown for free.
3.) Avoid deposits – If you plan on renting a car or reserving a hotel room, you don’t want to use your debit card. In both cases, the establishment will require a deposit or put a hold on your card. This means that you will not have access to all of the money in your bank account. By using credit cards instead, you can avoid the holds on your bank account as well as any deposits.
4.) Credit cards are safer – If you have a habit of using your debit card, be aware. If someone hacks into your debit card they have immediate access to the money in your bank account. It can be gone before you know it. It can take the bank some time, even weeks, to get your money back. In the meantime, your checks or scheduled payments can bounce and you will have to deal with insufficient funds charges.
In addition, this issue can lead to you making late payments which can hurt your credit score. Using credit cards instead means that if they are hacked, the hacker does not have access to your money, and the credit card company will deal quickly with the criminal.
5.) Improve your credit score – If you use your credit cards wisely, meaning you don’t use the entire credit line and pay the balance off monthly, your credit score can increase. Debit cards, on the other hand, do not show up on your credit report, so they have no effect on your credit score. So, if you are trying to improve your credit score, it is a good idea to use your credit cards wisely.
There are times that using credit cards make sense. You can receive money back, earn rewards, save yourself the headache of dealing with holds on your bank account, and know that your money is safe and sound, and you can even improve your credit score. So, the next time you start to pull that debit card out of your wallet, you might want to think again and use your credit card instead.
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