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Are you thinking about getting a credit card?
Maybe you have received a credit card offer in the mail, like everyone else. Or maybe, you have been offered a credit card in person when you were at school or at the shopping mall. Or just maybe, you’ve seen one of hundreds or thousands of ads on TV.
There are plenty of reasons to get a credit card. The convenience, the security, to build credit, to have different ways to pay, to get rewards.
Whatever the reason, you have decided that you are going to look into getting a credit card. Congratulations, you’ve decided to join almost everyone else using credit cards.
What is a Credit Card?
A credit card is a thin rectangular plastic or metal that is the same size as your state ID and is issued by a bank or financial services company, for example, American Express or Visa. A credit card allows you to pay merchants or businesses for goods or services.
They allow you to pay for these goods and services by borrowing money, up to a set limit, with the condition that the money that is borrowed is paid by the billing date or whatever payment plan is agreed upon, including any interest that was part of the agreement.
In other words, you are borrowing money from a bank or a company when you pay for something with a credit card. When you make a payment, you pay back what you borrowed to pay for whatever goods and services you bought.
What Are Some Benefits to Using Credit Cards?
Using credit cards has some benefits, some of which are listed below.
You Can Build a Credit History
Credit cards allow you to have access to a line of credit. Paying for things with a credit card helps you build credit, while debit cards do not.
Building your credit by using credit cards can be as simple as paying for things like gasoline, groceries, or any bills, items that you will probably pay for anyway. Simply paying for things like these or other items with your credit card and making sure to pay the balance before or when it’s due will help you build your credit.
Building credit is one of the best benefits of having and using credit cards. You will find out that your credit matters a lot when you go to make a big purchase, for example, an automobile or a house.
Without good credit, getting that automobile or that house will not make it much more difficult, it will make it much more expensive. You will want to build up your credit if possible and know your credit score, before making that kind of purchase.
You can save yourself thousands of dollars, just when financing a vehicle.
You Can Get Rewards
Some credit cards offer rewards for using them. Some of the rewards are travel points, discounts, and cash back. These rewards would not be available to you if you only use a debit card or paid cash.
For example, some credit cards might offer two points (points can also be referred to as miles) for every dollar that is purchased with that credit card. You could then use those points to get airplane tickets, depending on how many points you have earned.
Using Credit Cards is More Secure
It is more secure when you pay for something with a credit card, compared to a debit card.
The reason that credit cards are more secure than debit cards, is because credit cards are linked to a line of credit, while debit cards are linked to your bank account.
Credit cards give you the convenience of not having to carry around large of physical cash on you. All that you have to do is carry around a small plastic or metal card that can easily fit in all wallets. Couples can even find the best joint credit card and use them as per their convenience.
Also, imagine that you want to buy an airplane ticket, book a hotel, rent a car or pay a bill. Paying with cash for those types of transactions is time-consuming and really inconvenient, and sometimes not really possible.
If you want to book a hotel, or you want to buy an airplane ticket, and you are in another state, it would not be realistic to pay for these types of services in person.
There are some services that you cannot pay for in person, for example, if you want to get web hosting, and paying with credit is one of the only options.
Not only is having credit cards more convenient than physical cash, but credit cards also give you the security of not having to carry around a large amount of physical cash on you. This alone can greatly reduce the likelihood that someone would try to rob you.
Protection from Theft
If you were to get physically robbed, there would almost no chance of you getting whatever items they took from you back. If someone were to hack your credit card account and commit fraud, you do have some protection. Federal law and credit card fraud protection policies limit your liability if someone were to make fraudulent charges on a lost or stolen credit card.
Another benefit of using credit cards is the ability to dispute transactions. You can dispute transactions for items that were never delivered, damaged or not delivered as promised. When you use a credit card to make such a purchase, you only have to deal with your credit card company. If you were to pay cash, your only option would be to deal with the company that sold you those items.
You May Read: Which Type of Spending Should Go On a Credit Card?
Credit cards are a great option for paying for goods and services, building credit, and more. They do have their drawbacks, which we did not cover here, but having a credit card is a great option to have.
So, the next time that you have to pay for something, make sure that you have the option of paying with a credit card.