Top 8 Benefits of Using Credit Cards

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It’s easy to get drawn into bashing credit cards, namely because there are so many people who struggle with overusing them, end up in debt, and then get buried with high interest payments. When used properly though, they can be a great way to make your life easier.

A credit card is a type of personal loan offered by a financial institution, and the institutions will only issue unsecured credit cards to individuals they deem creditworthy. Although credit cards are available today for people of all income levels, even those with poor credit, having a credit card work for your benefit takes knowledge and planning.

1. It's a Rewarding Life

Issuers today compete by offering different rewards to its consumers. These benefits can come in the form of reward points, miles, cash back, gas discounts, etc. If you use your card properly, pay off your balance in full every month, and take advantage of special card deals, you can get some pretty cool rewards. Free flights, free gas, goodies, hotel stays, restaurants…the list goes on. Why not reward yourself for money you spend anyway?

2. Bill Management

Do you have several bills from all over the place and worry about remembering to make payments on time? Managing them with your credit card is a great way to make sure that no matter what, those bills are paid on time. For example, your phone bill and other utilities could be tied to your card. That way, no matter what happens, the bills get paid. Even if you don’t have a history of forgetting to pay bills, why risk the chance of it happening?

3. Small Business Finances

If you own your own business, getting one specifically for your business can help you manage your finances and your bills, keep your business separate from your home expenses and make things easier come tax time. A good business credit card will also help you get more rewards for your business which can help you save money.

4. Security

Carrying around a large wad of cash is less secure. Furthermore, if you are purchasing big ticket items like furniture, most stores will prefer plastic over cash. You can still buy things with cash, but you might get odd looks and there may be some stores which refuse to take cash for security reasons. And if your wallet gets stolen with no cash in it, you’ve lost nothing so long as you call your issuer right away to cancel it.

5. Credit History

Obviously you need to build your credit history if you want to do things like get a mortgage, car loan or other good loans. The easiest way to do this is to start with a good prepaid (or regular if you have a good credit score) credit card and use it regularly--paying it off in full every month. There are lots of cards available, including ones for those with no or poor credit history, so it’s an easy way to start working on improving your FICO score.

6. Travel Benefits

If you are an avid traveller, you’re going to need a good travel rewards credit card to receive rewards on the money you are already spending, especially if you do a lot of business travel. They often have advantages for renting a car, booking a hotel room as well as airline tickets. Once you start using a travel credit card, you'll wonder why you didn't apply for one sooner.

7. It’s an Interest Free Loan

Assuming you pay off your balance in full every month, you just got an interest free short term loan! No bank in the world will be able to beat that.

8. Extra Buying Power

Sometimes an unexpected expense comes up, usually at the worst possible moment. Carrying a credit card can help you deal with that expense right away with less stress. Again, make sure to pay off the balance as soon as possible, but at least you are prepared if you need to have your car towed and repaired if needed, get a hotel room in short notice, or deal with other unexpected events.

Conclusion

Credit cards can be a burden if they are used unwisely. Use them properly, and they can be incredibly helpful and beneficial. Be wise about budgeting for your spending and monthly payments, and they can be a great financial tool that pays you back.

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