5 Good Reasons to Use a Credit Card

Personal finance gurus spend a lot of energy attempting to prevent us from using credit cards, usually with good reason. Credit cards are frequently abused and are the cause of a lot of personal debt.

Not to mention the average interest rate on credit cards is usually between 20% to 30%.

However, credit cards bring you a lot of advantages as long as you use them wisely. In fact, credit cards are frequently a better way to pay for things.

Consider these benefits:

1. Rewards

Credit cards offer significant and/or interesting rewards and signing bonuses. They range from cash-back to free movies or groceries or travel points, or statement credits.

2. Safety

Using a credit card makes it a lot easier to avoid financial losses due to fraud or unfortunate timing on automatic payments.

For example, if you pay your bills with automatic payments directly out of your checking account, these automatic drafts can also potentially result in insufficient funds and overdraft fees.

If your debit card is used fraudulently, your money is taken out of your account instantly. It can also take some time to get your money back.

By comparison, when your credit card is used fraudulently, you don’t lose any money; you simply notify your credit card company and you don’t have to pay for those transactions.

3. Grace period

Credit card usage gives you time to pay, usually a couple of weeks on the average before any interest kicks in. With a debit card, the money is gone instantly. If you have your money in a high-interest checking account, the amount of interest you will earn can be significantly more over time by paying for your purchases with a credit card.

When you put your purchases on your credit card, your money will spend more time in your checking account, where it may earn some money for you. If you use a debit card for your purchases, the money is in your account for a much shorter length of time, thus earning less interest.

4. Insurance

Most credit cards include a plethora of consumer protections that most people aren’t aware of. This includes things like rental car insurance and travel insurance. Some product warranties are also made more advantageous when you pay for the item with your credit card.

5. Building credit

If you don’t have a credit history or if you need to improve your score, a credit card can help raise your credit score. Debit cards do nothing to help your credit score.

Final Word

See, credit cards aren’t all bad! Provided you use them responsibly, credit cards have a lot to offer. So dust off that credit card and put it to good use; just be sure to pay it off in full every month.