5 Reasons To Use Credit Cards

Experts of the field of personal finance spend a lot of time and energy trying to prevent us from using credit cards. There are good reasons for that. If used right, credit cards can save you a lot of money. Heck, you can even get an interest-free loan if you can return the loan before its due date. But on the other hand, using a credit card can be a disaster if you do not know what you are doing, and end up with tons of debt.

In this article, we shall first explain why and how credit cards are useful in our lives. We shall then see the various reasons to use it.

How is a credit card useful and why should you use it?

One-time bonus

When getting a new credit card, it certainly feels nice to get those initial bonuses. When it comes to credit cards, only the ones with good credit are chosen or approved. You can get bonuses worth $150 to $200 or more. You will get such bonuses if you spend a certain amount within a certain time. For instance, you may get bonuses if you spend $1, 00,00 in one year. Other credit cards give benefits or bonuses in the form of redeemable reward points or miles. 

Cash back

Discover was the first credit card to introduce the cash back facility in the USA. It is a simple idea. You can use the card to 1% of all your purchases rebated as cash back. Today, all credit cards offer this facility, or most of them do. Some cards have 6% cash back on purchases. 

Reward points

Credit cards offer reward points to enable cardholders earn points based on their purchases. For instance, you get a certain amount of points on every dollar you spend. Many banks give this benefit on how much you spend on groceries, restaurants and on gasoline. There are certain thresholds, and if you pass them, you can redeem your points for gift cards, travel tickets or passes, restaurant benefits and vouchers.

Flyer Miles

Did you know this was the first side-benefit credit cards offered? Interesting, right? Back in the 1980s, American Airlines offered their customers a new way to get frequent flyer miles when they are not flying, by developing a partnership with Citibank. Today, most credit card companies offer this benefit.

Safety

Credit cards are coveted because these are safer than debit cards. When there is a theft of the card, you do not lose your own money. Any money lost from a credit card theft is of the bank. You will not have to pay the bank anything, unless you already have dues. The bank will give you a new card. A debit card on the other hand is more dangerous when stolen. The thief can use the card to buy a lot of items, leaving your account depleted. If you, unknowing of the theft, buy something in the meantime and if there are cheque bounces, your credit score is affected. There is no such problem in the case of credit cards.

As you can see, there are several reasons to use your credit card. Don’t be afraid to use it, but of course, use it carefully.