When Managed Properly Credit Cards Can Offer Some Tempting and Worthwhile Rewards
Owning a credit card can be a rewarding experience when managed properly. From rewards points, signup bonuses, frequent flyer miles, exclusive events, and more, if you use your credit cards responsibly they can be well worth it. Let’s take a closer look at the positives of owning and using credit cards.
Credit cards are one of the most reliable financial tools to own. They widen your capabilities and provide you with purchasing power whenever you need it. If you can manage your credit card well, you’ll be able to reap many rewards. Here are the pros of owning one and why so many people have them:
Credit Card Signup Bonuses
Typically, credit card companies offer bonuses to take advantage of when you first get a credit card. When you have an excellent credit score, you can even access opportunities unavailable to most people. For example, some cards offer you 0% interest for three months or more after signing up.
Here are some other offers that card companies may give when you first get a card:
Bonus Travel Miles
Building Your Credit Score
A credit card with monthly payments will help you build a credit score as long as you pay on time. When you do so over long periods, you create a good payment history that will provide you access to better deals. You can get better terms on mortgages or auto loans and even access high-quality credit cards with lower fees.
Things will only go up as you get a better credit score with your card. This is because a high credit score means that the borrower is low risk. Lenders know they are more likely to pay them back, so they are less averse to dealing with these borrowers.
Get Exclusive Deals Online
A credit card can help you buy items online. However, the difference between credit cards and debit cards lies in the benefits you get when using credit cards. For example, a credit card company may partner with a hotel, opening up discounts for card users. You’ll pay less if you use your card to rent a room there, and that discount is only available for the credit cardholder.
Credit Cards Are Accepted Almost Everywhere
Your credit card becomes your most valuable financial tool when you are traveling. It will be easier to get rentals, and you won’t have a problem making purchases when the store has credit card options. For example, if you rent a car, the rental company may charge a deposit, keeping some of your funds suspended until you return the vehicle. If you use your credit card, you’ll still have money in your bank account when you rent the car.
The accessibility of a credit card means you can bring it along with you and have an alternative to using your debit card or cash. If you find that you travel often, use it to your advantage. You’ll be able to retain your spending power when you need it.
Access to Cashback Benefits
Cashback acts as a form of discount, which became popular years ago. For example, with a flat 1% cashback rate, you get 1% of the money you spend back on every purchase. Some companies also offer cards with percentages that vary depending on the item category. For example, they may offer 3% on groceries, 2% on gas, and 1% on all other purchases.
Other cards may even offer cashback bonuses for buying from specific stores. If you prefer a specific brand of clothing, you might get up to 5% cashback every time you purchase from there.
While these percentages might not sound like much, they can add up over time. If you consider that the average American spends $61,334 every year, 1% of that is $613.34. If you get a cashback card that works well with your current spending habits, you can find even more savings.
Aside from cashback, reward points are another incentive that makes it beneficial to own and use a card. For example, for each dollar you spend, you can get one point that you can use for specific categories. Some cards may offer meals at restaurants, gasoline discounts, or gift cards. Others even offer bonus points for specific purchases or limited-time offers.
You can go to their partner company to redeem the reward or go to a specific portal offered by the company. From there, you can spend the points like a store. These rewards often happen when the company partners with another brand. If they partner with a hotel, you can get reward points for booking. The strategy is to find a card with rewards that fit best with your lifestyle.
If you’re already buying from that store regularly, get a card that rewards you. The perks will at least bring back the cost of fees and interest rates the company may charge.
Easier Refunds and Compensation Processing
Credit card companies have rules that allow users to get back the money they used with the card if the purchase was faulty. For example, if the item did not show up or was not as described, it’s common to approach the store directly. If the store refuses to give you a refund, you can contact the credit card company.
The company will make an investigation and can then provide you with a chargeback if they do find some fault. Without the credit card company, you’ll have to accept the loss. With them, you have a chance to get back the money you spent.
Track Your Spending
At the end of each month, you’ll get a statement sheet detailing what you owe as payments to the credit card company. One of the benefits is that it lists each specific purchase you made on the card. It can be a great way to track your spending and see if you are working within your budget. You may even see faulty transactions that you can dispute or adjustments you can make in the next month.
You can use it come tax season when it’s time to reference deductions like charitable contributions. The statement is a respected and honored record in most of these cases.
Added Protection to Your Money
Bringing debit cards can be a liability in some way. There’s always a threat of theft or loss when you go out with them. With an item like a credit card, you won’t worry about losing money from your bank account. If you do get your card stolen, you can call the company, and they can block the card. They may also cancel some of the purchases made with the card if there are any.
Issuing a new card is also easy. Many credit companies will offer it to you for a small fee. Now you can travel or go to various locations without worrying about people getting direct access to your bank account. It provides that added protection and some peace of mind.
While it’s never recommended to spend money you don’t have, sometimes you can use a credit card to spend money you will have in the near future. For example, if you are paid at the end of every month but you need to buy groceries every week, you might go ahead and put the groceries on the credit card and then pay them off when you do get paid.
If you can manage your card responsibly, then you’ll have added flexibility for budgeting than if you spend the money only when it shows up in your bank account.
Get Added Short-term Insurance for Purchases
Many credit card companies offer added insurance to any purchases using their card. It’s available for a limited time, depending on the signed agreement. If the item breaks with normal use or someone steals it within the period, you’ll get your money back. You can give the company a call to check the insurance duration.
While it is possible to get insurance for standard purchases, some credit card companies offer this without any added fees on your end. It’s a benefit that’s always good to have if something goes wrong.
Is a Credit Card Right for You?
There are many other benefits that cards can give that aren’t listed here. Carefully consider each to see if getting one is right for you. There is no one answer, and it all depends on your circumstances. Some people may find that a card fits best with their lifestyle, while others don’t need it. In the end, it’s up to you to decide whether or not getting a credit card is worth it.