Reasons to Use a Credit Card
Some folks talk about credit cards like they’re dangerous and lead to excessive debt, but there are plenty of great reasons to use a credit card as a form of payment. Credit cards offer several perks such as airline miles, sign on bonuses, and earnable rewards, all while building your credit history.
Using a credit card for your daily purchases can be an excellent way to build up your credit history. When you pay your credit card bills on time, you prove to lenders that you are reliable. Staying within your credit limit and paying off statements completely each month will boost your credit score and can help you receive future car loans, mortgages, and more.
Rewards, Points, and Bonuses
Many credit cards offer buyers a variety of enticing rewards and sign-on bonuses. Most operate on a point-based earning system, with dollars spent earning a certain amount of points. You can earn airline miles, retail gift cards, hotel stays, and more, depending on which card you choose.
Depending on how frequently you use your card, these rewards can add up to give you enjoyable perks for money you’re spending anyway. Some cards even offer a cash back system, with points transforming into actual cash.
Safety and Insurance
A big reason to use credit cards vs. debit cards is an extra layer of protection. If your debit card gets stolen, money from your checking account can be withdrawn before you even realize the card is gone. This could lead to bill payments bouncing or insufficient funds, creating bigger headaches across multiple transactions. Fraudulent credit card changes can typically be resolved much easier, absolving you of fault and keeping your credit score clean.
When Not to Use a Credit Card
While credit cards are helpful, they should not be your only payment option. Credit cards can’t be used for mortgage payments, student loans, or taxes, and if you have a hard time managing your total balance, they could get you into trouble. Overspending negatively affects your credit score when you can’t pay your balance back on time, so be sure to spend smart when using credit.