Credit cards are a hot topic debate. While some people believe them to be an essential part of the modern world, others look at them as being a “gateway drug” to debt and bankruptcy. I believe the truth is somewhere in between.
There are many benefits to using credit cards, when used correctly.
- You earn points towards cash, gift cards, travel, etc.
- Some offer no interest for a certain amount of months
- Safer than using your debit card
- It builds your credit score
- Some offer discounts on purchases (store cards for example)
Using your credit card for everyday purchases, such as gas, food, and shopping, can earn you points. The more you spend the more points you earn, and those points can be turned in for gifts or travel discounts. It also helps to keep your checkbook easily balanced because you won’t have 30 transactions per month to sort through.
Credit cards can also be really useful in those times where you need to make a big purchase now, but won’t have the cash for a few months. Many cards offer the option of no interest for an extended period of time. Typically I’ve seen 6 – 18 months. When we bought our first home, we did this to purchase all of our furniture.
Using your debit card online and at the gas station can be risky. Experts suggest at Creditcards.com that using a credit card is much safer than debit because you can always file a dispute and get the money back. But with debit, it is your money and it is instantly taken from your account.
If you have any inkling that you will be applying for a loan of any kind in the near future, you will want to build your credit score up as much as possible to get the lowest interest rate. The easiest way to do this is to use your credit card and never miss a monthly payment.
There are plenty of cons to using credit cards. But if you are responsible and good with your money, the benefits greatly outweigh the drawbacks.
- Too easy to spend money (for some people)
- Late payments negatively affect your credit score
- Yearly fees
Research multiple credit cards online before making your decision to get one. Most offer many great incentives, such as the points. And some are definitely better and cheaper than others. Shop around to get the best interest rate and most points per dollar spent. Use credit cards to your advantage. It’s an easy way to earn gift cards for gifts and holidays. You can’t beat getting rewarded to shop!