Despite their bad reputation, credit cards can be beneficial if used responsibly. Read on and discover the five perks of using a credit card.
- Take Advantage of Cash-Backs and Redeem Reward Points
One of the perks of using a credit card is cash back on your spending. The provider may offer users a percentage of the purchases in dollars as a cash back rebate. Most cards will offer a cash-back from 1 to 6% in cash of the transactions you’ve completed.
You can also earn points for every dollar you spend with a credit card. Once you reach the card’s threshold, you can redeem the points to cover your purchases.
Different companies have varying reward systems, determining what you can redeem. For example, the company may offer points for groceries or items from a specific retailer. Consider your spending patterns before choosing a card to make the most of the reward system.
- Earn Frequent-Flier Miles
If you travel frequently, you can also take advantage of frequent-flier miles. Typically, credit card companies will reward you with one or two miles for every dollar spent. Statistics suggest the average traveler loses 64,800 points, equivalent to $648 in travel expenses.
You can use the miles accumulated on your card for airport lounge access or cover hotel expenses. If you are loyal to a given airline, you can get more benefits by choosing an airline-specific card. Also, review the annual fees, interest rates, and initial bonus offer to determine if the card is worth it.
- Build Your Credit Score and Access Financing
Another perk of using credit cards is you can use them to build your credit. Unlike your regular debit card, credit card companies report your score to credit bureaus. If you use it responsibly, you can access financing in the future.
You can sign up for credit cards for bad credit if you are worried about your score. According to Lantern by SoFi, secure cards “rarely have excessive fees and ultra-high interest rates.” If you pay your bills on time, your credit will improve, and you can apply for a standard credit card.
- Extra Safety to Discourage Fraudulent Transactions
Completing transactions through a credit card is safer than through other modes of payment. For example, the funds in your debit card are immediately deducted from your checking account. However, recovering the money can be complicated in case of fraud and may affect your credit score.
Credit cards often come with zero-liability protection. If you report the fraud punctually, the credit card company will cover the expenses. Credit card providers also offer monitoring tools to detect fraud as it unfolds.
- Convenience and Wide Acceptance
Credit cards are a widely accepted form of payment. You don’t have to carry cash or a checkbook. Most retail shops, vendors, and eCommerce sites will readily process your payment. You can also add your credit card to your Google Pay or Apple Pay account for a more convenient checkout.
When you urgently need many, you can access cash withdrawals at no interest. The issuer will set a limit for the amount and repayment period. Nevertheless, non-interest withdrawal is a convenient source of funds when you need money during an emergency.
You can always use credit cards for bad credit if you want to improve your credit score. Be sure to do your due diligence on interest rates and annual fees to determine if the card is worth it.