Credit cards are a convenient way for people to be able to buy their needs and wants. They have become part of everyone’s lives, and they are being used each month. Their usage is further encouraged by the friendly terms that allow consumers to shop with convenience as long as their purchases are within their credit limit. Learn more about credit cards on this page here.
Know that a credit card can become a trap if it’s not used correctly. Spending only what you can afford to pay monthly is always important, or the interest will get higher each month. On the flip side, here are some advantages that you need to know:
Advantages of Credit Cards
1. Easier Access to a Line of Credit
Take advantage of your line of credit to shop for groceries, bags, vacations, appliances, and more. You can reach your goals faster and access the funds easier with a swipe. You’ll enjoy all your purchases today and pay them later on. You don’t have money going out of your checking account, and you don’t need to put a dent in your savings for renovations or home appliances.
2. Building your Score
If you’re constantly swiping when you shop, dine, travel, or book hotels, you’re actually building your credit score, especially if you’re always on time with the payments. Most banks view those individuals with an active history more favorably, and you’ll have a higher chance of getting an increase if you keep using and paying on time. Your score will also build-up, and your creditworthiness will increase, so it’s easier to get a mortgage or a car loan down the road.
3. One-Time Bonuses
You’ll be able to take advantage of initial bonuses, especially if this is your first time using a credit card. Those with an excellent rating can get approved for programs that offer a $100 to $200 rebate when you spend a specific amount in a month. This minimum spend can be anywhere from $500 to $1000 in the first few months after opening an account.
These bonuses generally entice individuals to take advantage of their miles and reward points that can be redeemed for checks, merchandise, plane tickets, and gift cards. On the other hand, debit cards don’t generally have points or ongoing rewards, and your bank balance decreases if you keep using them.
4. Cash Back Promotions
Discover first popularized the cash back programs in the United States. The idea is to use the credit card for purchases and get 1% rebates as cash backs. This concept is still in use, but some banks may offer 2% to 5% on specific purchases of introductory cash backs. However, these offers are only available through annual or quarterly spending caps. These cash-back programs also have higher rewards rates but charge minimal interest.
5. Points and Rewards
The individual can earn a point for every dollar that they spend. It would be more points if they hold gold or platinum cards and if they frequently spend on a specific grocery shop, restaurant, or gas station. After reaching a threshold, the holder can redeem these rewards for gifts, travel points, and free dinners. They can also exchange them for merchandise on the banks’ websites.
Know that the options are endless, and there’s a chance for you to get another co-branded gift card with a clothing retailer or a resort that’s partnered with the bank. Non-profit organizations like the AARP may leverage your spending so you can get rewards every single day.
The trick is to find the ones that are in sync with your lifestyle and shopping patterns. Check out https://kredittkortinfo.no/ for options and more about the rebates and points different lenders offer. When you adjust your spending habits just to fit with the rewards given by a specific card, it can be counterproductive.
However, when you’re already spending money with specific retailers regularly or have preferences for particular restaurants, you can always be the credit line to continue your patronage and get perks, discounts, and rewards.
6. Flier Miles
The flier mile is a very popular advantage and predates everything. It started in the 1980s when consumers got offers from American Airlines to get flier miles even if they were not traveling through a partnership with a bank. Nowadays, international and domestic airlines have at least a preference for a single major credit card issuer to reward customers.
Many individuals may earn miles per dollar in some purchases, which could earn you business class. With the introductory bonuses and more mileage, the frequent fliers can save about 50% to 60% on their plane tickets after meeting the initial requirements.
7. Universally Accepted
Specific companies like Visa, Mastercard, Amex, and others are recognized worldwide. This is convenient when you’re always traveling as hotels and car rental companies generally require credit cards to charge their customers.
Some hotels will charge for damage to cars and hotel stays, and they are also unsure about the final amount after you’ve checked out. The merchant may also withhold specific amounts to protect themselves from other unanticipated charges. Also, others won’t accept debits even in foreign countries, even if you have the bank’s logo stamped on it.
8. Safer Option
Paying with your line of credit makes sense and helps avoid fraud and losses. When someone steals your debit card and they can use it, the money will instantly disappear from your savings or checking account.
Any scheduled online payments you might have arranged before may bounce, triggering the insufficient funds alert. This will affect your credit score because of missed payments, even if everything is not your fault. Fraudulent transactions take a lot of time before they get reversed, and bank investigations could take a while.
On the other hand, you won’t be out for money if someone swipes the card fraudulently. You simply notify the company or the bank, and any transactions you didn’t make will be null and void. You can also block everything while the issue is under investigation. Others like Mastercard and Visa provide zero liability coverage, which is often an attractive offer to consumers.
9. More Honest Vendors
You might have spent a lot on home renovations, and the contractors charged you $5,000 for the job. They spent the week setting the bathroom tiles, painting, grouting, measuring, and cutting materials in your home. You write them a check from your savings accounts for their hard work.
However, what if the tiles begin to shift or the paint becomes muddled? You will have a messy home and a headache at the same time.
There’s a chance that you could escalate the contractors to the licensing board, but this could take months. This is why a big-ticket purchase such as a home renovation generally uses a credit card. There will be no problems with disputes, and vendors are encouraged to be more honest. The funds can be withheld, and you also have the chance to find a new worker.
10. Get a Grace Period
The money is gone after purchasing with cash, and you’ll never have it back. This is not the same with credit card purchases because the money remains in your account until it’s time to pay the bills.
Having extra funds can be helpful in several ways. The first thing is you know how to value money and save it. Delaying the payments would make this big-ticket purchase seemcheaper. The funds can spend some more time earning interest in your account and get more because of grace periods. You will not need to watch your current account closely when you’ve set up consistent payments.
Credit cards are a convenient way to access a line of credit when you need them, and they come with several benefits. But why do people use them? There are a few reasons: convenience, security, and reward systems.
However, paying with these cards might not always be the best option for you. The retailers will honor a specific bank issuer because they want you to patronize their business. However, the merchants may still pay transaction fees every time they make a sale. This is why they may prefer cash sales and give a discount if you pay in full with cash.
The transaction fees can become substantial on big-ticket items like brand-new appliances. However, you might be missing out on the insurance and consumer protection specific banks offer, so you might want to re-think your decisions to pay in cash.