Considering a credit card as a simple piece of plastic, it can do wonders and make your life easier. In addition to making shopping seamless, many credit cards come with several great benefits, including ways to save money on purchases and added consumer protections. As long as you are using your credit card responsibly and wisely without outstanding debt, you have no excuse to not use your credit card to make your payments.
It Helps You Build Credit
Your credit score depends on many important factors, including the length of your credit history, your repayment history, and your credit utilization. Using your credit card responsibly by making your payments on-time, keeping credit cards open for long periods of time, and only using a small percentage of your available credit will help you build a significant credit score.
Getting a Sign-On Bonus
When you make your first purchase after you just opened a new credit card, you can earn a major sign-on bonus, which could be a cash bonus, extra rewards points, or extra cashback. For instance, the PenFed Gold Visa® Card gives new cardholders a $100 statement credit when they spend about $1,500 in the first 90 days. If you usually spend around that much, it can be worth considering applying for this card to get the statement credit.
It Protects You From Fraud
Things aren’t so smooth with debit cards when the money is taken from your account and must be recovered. However, using credit cards can give you that extra peace of mind from knowing that your money is safe from fraudulent purchases as they can be easily disputed.
You Can Rack Up Reward Points
Based on the card’s type, many credit cards give you the opportunity to earn reward points for every dollar you spend, which you can then redeem for travel rewards, gift cards, and merchandise.
Tracking Your Spending becomes easy
When you don’t use a credit card, keeping track of payments you make in cash can be a little difficult. However, when you pay for purchases with a credit card, it’s very easy to see the amount you are spending and on what, the thing that can help you to easily track your cash flow and see where you might be spending a lot.
It Protects You From Dishonest Vendors
You should always choose to pay for services like auto repairs and home improvement jobs with a credit card whenever it is possible because you can easily dispute the charge and get your money back in case something goes wrong. Conversely, it will be difficult to get your money back if you pay with cash or check, and your car stops working again or your contractor does a shoddy job installing new flooring.
You Get Extra Time To Pay
It is never a good idea to use your credit card to pay expenses that you won’t be able to pay back in full by the time your bill is due, but it can be useful for making purchases when you’re in between paychecks and don’t have the money in your account to cover the purchase just yet. Actually, paying with credit cards allows your money to grow in interest-bearing accounts, such as a high-interest savings account or interest-earning checking account, in between payments.
You Can Get Cash Back on Purchases
Using a cash-back credit card to make purchases means that you save on every purchase. The percentage of cash-back you get will sometimes be based on the category of the purchase you make, such as groceries or specific retailer purchases. However, regardless of the category, other cash-back cards will give you a fixed amount back on all purchases, such as the PenFed Power Cash Rewards Visa Signature® Card, which gives you the opportunity to earn 1.5% cash-back on any purchase or 2% cash-back on purchases if you are a member Honors Advantage.
Earning Frequent Flyer Miles Without the need of Getting On a Plane
Today, most major airlines have their own credit cards that allow you to earn miles with any purchase you make. According to Investopedia, typically, $1 spent equals one mile.
Providing You With Rental Car Insurance
Rental car insurance is one of many consumer protection many credit cards offer today. This means that by using your credit card to pay for the rental car, you will be reimbursed for the cost of theft or collision damage in the event of any incidents.
It Can Protect Your Travel Plans
Having a credit card also might offer some form of travel insurance. Some cards will reimburse you for a trip that is canceled or cut short because of sickness, severe weather, or some other reasons, even if your booking is non-refundable. In addition, you might be able to be reimbursed for accommodations and meals in case your trip is delayed, or reimbursement if your baggage is delayed.
You Can Get Free Checked Bags
Using your credit card to book your travel can earn you some travel reward cards, which can allow you to get free checked bags on certain airlines. This can be extremely valuable for people who fly frequently.
You Can Earn Hotel Loyalty Points
Typically, some credit cards give you the possibility to transfer rewards points to a hotel loyalty program, the thing that can allow you to swipe your way to room upgrades and even benefit from free stays.
Your Purchases Are Protected
Protection for your purchases is another perk that some credit cards offer, which includes reimbursement for a purchase that is damaged or stolen and extended warranties on some products.
You Can Save on Interest
Moving debt to a balance-transfer card with a 0% annual percentage yield, can give you the possibility to save big on interest payments. You just need to make sure to pay off any debt before the introductory period runs out and the interest rate increases.