Contrary to popular belief, using a credit card is actually good for your finances, but before you jump for joy, it must be noted that a credit card needs to be handled responsibly for you to reap its benefits. If used right, credit cards are quite useful. In fact, the Bank of America notes that credit cards can help build your credit or even repair it. They can also protect your transactions and give you insurance for a number of things.
While personal finance experts dissuade people from using credit cards due to the increased potential of falling into debt, there are reasons why you should still keep one in your wallet. With a credit card, you can get sign up bonuses, rewards, frequent flyer perks, cash back, and more importantly the convenience of paying for the things you need wherever in the world you may be.
The Right Credit Card
Choosing the right credit card is essential. If you are a frequent traveler, getting a rewards card is definitely a good idea. You likely spend thousands of dollars on travel alone which means that a credit card with huge bonus points will be quite useful. You don’t only spend money on airfare for your travels, you also spend on hotels, car rentals, cruises, and food. Having a card that offers rewards for these purchases will surely benefit your wallet as you travel. Apart from that, it is more convenient to book flights and hotels with a credit card on hand.
There is a credit card for everyone and taking the time to choose which one suits your lifestyle will do your finances a lot of good. Credit cards also offer protection and security because it makes it possible for you to separate your purchases from your savings. You don’t get the same protection with a debit card, according to experts because once you have made a purchase, the cash is gone and if you happen to buy from a crook, you might as well say goodbye to your hard earned money. A stolen debit card is also a one-way ticket to your bank account.
Financing, Vendor Honesty, Grace Period, and Insurance
Getting a mortgage is difficult and if you don’t have a credit history, it will be next to impossible to finance your dream home or the car you’ve always wanted. Not having a credit card is synonymous to not having a credit history. Without a credit history, it will be more challenging to prove to the bank that you can pay for your monthly amortization. Having a credit card will open more doors for you and can even withhold payments if needed.
If you had some renovation done and the job was not done well, you can withhold payment until your house is fixed. Apart from keeping vendors honest, a credit card gives you ample time to come up with the money you need for a big ticket items. If you use your credit car to pay for new furniture and home appliances, you can pay for them on installment. It also doesn’t hurt that credit cards in general offer a plethora of insurance which includes product warranties that are longer than the manufacturer’s warranty, travel insurance, rental car insurance, and the like.
For the financially savvy, credit cards are a must-have but like other things, having a credit card and maintaining one requires discipline. If you think that applying for a credit card will be beneficial to you, ensure that you choose one that offers perks and rewards that you can use.
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