It used to be that credit cards were frowned upon and had a bad rap. Growing up it seemed to be that you only had a credit card on hand for emergencies, and that if you ever used one for purchases, it was that you didn’t have the money at the time. While it could be true that you don’t have the money, and want to pay it back over time, if used responsibly, credit cards can actually make good financial sense. Using carelessly, and you could put yourself into credit card debt that could take years to come out of, if you are even fortunate enough to get out without further consequences, such as a bankruptcy. There are so many pros to using a credit card, you can actually try and use for every purchase, as long as you can pay off the full balance by the due date.
While I have seen some restrictions with Discover being readily available to use, and even had a time or two where American Express was not accepted, you can’t go wrong with a Visa or Mastercard logo, not only being accepted across the country, but all over the world. It makes it nice not having to worry about carrying cash, or even checks if still accepted, and typically not having a minimum purchase dollar amount, you can pretty much use credit cards for any purchase anywhere.
Builds Up Credit
Whether you are starting out with your first credit card or have had one for years and have built up a significant credit line, every time you use your credit card and then pay off the balance, you are building up credit. Creditors want to see that you are responsibly using your credit card, so your credit score will actually improve over time by making on-time payments, and having a larger credit availability, compared to the balance. Using responsibly are the key words, so if you are starting out, or have had problems in the past, avoid being careless with purchases and not carrying over a balance to the next month, otherwise you begin to pay interest.
With the amount of fraud, it seems these days, whether it is skimming your card info at the gas pump, or having a breach in a store’s financial records, you never know when your account can be compromised. I had my debit card compromised last year and fortunately only had about $40 worth of purchases, but was from my debit card so I was out the money until it was reinstated. With a credit card, you don’t have to worry about your bank account being drained, and if there is a breach, you can get it settled before the due date.
Keep Your Bank Account Stocked
If you have booked a hotel room or rented a car lately, you have noticed that when your check-in, you have to give a card for incidentals, and may place a hold on the card until after you check out. If you use a debit card, they could play a few hundred dollars hold on, and may remain on there for a week even after you check out. With a credit card, if they issue a hold, you are not missing any money and will be resolved by the time you make a payment anyways.
Where it gets a little risky for making purchases, but again if you can use responsibly, it is nice that you can make purchases and not have to pay the full balance back until the next month, so it works out if you don’t have the money on hand at the time. Having be a month behind, you can make sure you can have the money by the time the statement balance is due, but it is a good idea to track purchases and still stick to a budget, otherwise you could be in for a huge shock with you get the bill.
Last, but certainly not least, is my favorite, and mostly the reason why I use a credit card for all purchases, is the rewards. These can come in the form of points that you can redeem for gift cards, or even better, receiving a check in a lump sum, once a year, based on cashback for all of the purchases you have made that year. If using responsibly, by making the normal purchases that you would be making anyways, you can earn significant cashback, so it makes sense to try and accumulate as much as you can.