Many people have had to dig themselves out of debt over the little plastic card. There have been people who have thought that such a little card really can’t do so much damage until it is too late. Some have sworn off using credit cards altogether, but there are benefits to using a credit card that really should be considered.
[Read: Low Interest Credit Cards]
Why Credit Cards are Convenient
The convenience of using a credit card is never having to deal with the bulky, wrinkled, torn, misplaced, and lost somewhere-in-your-purse cash, and there are no coins to keep track of. Of course, if you use cash, you will not have to pay interest, but the same could be said for credit cards, as long as you pay them in full and on time.
The Purchase Power of Credit Cards
Now this takes a bit of balancing and thinking through, but a sensible person should have no problem with this idea. When you use cash, you can only spend what you have on hand. When you use a credit card, you free up your cash on hand and are still able to get the item you want or need. Now here is the balancing part I mentioned know that you will eventually have to pay for the item later either by making payments which will include interest, or pay in full to your credit card company. The questions you need to ask yourself are:
- Is there enough money in the budget to make the payment?
- Is it possible to pay the card off in one payment?
If you decide that, you would rather use cash and not have to worry about the extra bill, that’s okay, too. That is what a responsible credit card holder is supposed to do, think.
Protection of the Credit Card
Now this is the nice part of using a credit card. The protection that a credit card gives you over cash gives a sense of relief to many credit card holders. There is not a credit card that doesn’t have protection against theft. The minute you notice your card is missing, you need to call the credit card company immediately! They will send you a new card, usually with a new number. If you find yourself in this situation, these are the two steps:
- Call the credit card company to report the card lost or stolen
- Credit card company sends you a new card
Now, by the Fair Credit Billing Act (FCBA), you are not responsible for the charges if you reported the loss of the credit card in time, meaning before anything was charged on the account. Otherwise, you may be responsible for up to $50.00 if you didn’t report it before a thief used your card.
Then there is the question of [Read: 7 Secrets Credit Card Companies Don’t Want You to Know]. Unfortunately, it happens too often. The part concerning the credit card to remember is:
- If someone uses the information from your card and not your credit card itself, you are not responsible for any of the charges
- You need to watch your statement regularly for any billing errors. Identity thief’s start using credit cards to purchase small items to make sure the account is active.
Versatility of Credit Card Rewards
Have you ever noticed the different types of cards that you can get and the rewards they offer? The local gas station may be a chain and offer their card with rewards, the grocery stores have cards that offer rewards for shopping with them. These are great loyalty cards, but the credit card rewards points cover a larger variety. Credit cards offer rewards that can be used for things from cash back, travel, hotels, and merchandise, just to name a few.
Building that Decisive Score with a Credit Card
Using cash or debit cards for day-to-day things is common. Cash is just not going to get you a credit score that businesses look at when determining your creditworthiness. A credit card can do that if used properly. The easiest way to build your credit to get a good credit score with a credit card is:
- Charge what you can afford to pay
- Always have available credit
- Limit your Credit Cards
- Pay in full, whenever possible
- When you carry a balance pay on time, and pay more than the minimum
- Don’t close old credit card accounts, they help your credit score because of age
Retailers Respond Better to Credit Cards
Sometimes cash just doesn’t work. Retailers even frown when you use a debit card to reserve a car. You have to have the money in there and the transaction has to go through before you can go any farther. That is ONLY if they are willing to talk to you. That can just be a hassle.
Having a credit card makes things much simpler. You can pick up the phone and reserve a car, a plane ticket, a hotel. Make reservations at a high-end restaurant or reserve a banquet hall. A credit card can make all the difference.
The Speed of a Credit Card
With a credit card, it just seems like you can get more things done in a shorter amount of time. The amount to pay at the register is on the screen at the Point Of Sale (POS), we swipe the credit card, it is accepted, the slip comes up, we are asked to sign, we compare the amount to the receipt, slide it in a pocket and we’re on our way.
With cash, we have to get it out, count it, the cashier recounts it, puts it in the drawer, pulls the change, if any, counts it back, we recount and compare against the receipt, put it away, and move on. That sounds like a major undertaking.
If you use credit cards responsibly, you can compensate the drawbacks. After reading this article, there are drawbacks to cash, too. There is nothing wrong with having both cash and a credit card in your wallet. You are better off using cash for everyday purchases and purchases of things that are perishable. The credit card is for things that are more substantial.