While there are many cautionary tales about people who have made a massive financial mess by abusing a credit card, having one is to your advantage. That is provided you are prepared to use it responsibly.
You know the rules: do not overspend on a credit card because not making timeous repayments damages your credit score. The interest on an outstanding balance compounds, and, before you know it, you are in over your head.
That notwithstanding, here are reasons you should use a credit card for purchases:
Earn rewards
Debit cards offer few rewards. Store loyalty cards are useful and let you accumulate points for future purchases, but only at that franchise. Credit card rewards are more flexible and lucrative than any other. Therefore, when using your credit card to buy discount gift cards, you will be rewarded twice.
The first reward is the saving on your gift card, and the second is credit card points or cashback payments. Some credit cards offer better incentives when you buy from specific retailers, but this mostly applies to online purchases.
If you are looking for additional incentives to shop online, consider the Checkout Saver cashback extension. It is a payment portal that offers customers rewards that include access to discounted gift cards, which they can use in the future or give to loved ones as presents.
Each time you use a payment platform, the retailer pays the company some money, and some organizations funnel portions of such payments back to loyal customers.
Less risk
When quoting your debit card number, you provide a direct link to your bank account. Should that information fall into the wrong hands, fraudsters could empty your account. Your legal recourse is limited and time-consuming, and it is challenging to recover missing funds.
A credit card is not linked to your banking information, limiting how much damage can be done if someone accesses your card information. Naturally, no one should accesses such sensitive information, and online payment portals are continuously seeking ways to make transactions secure and keep customers’ data private.
Build your credit score
A healthy credit score is essential for securing additional financing. One of the easiest ways to set up a good credit reputation is to take out a credit card.
However, this strategy only works if you pay your installments on time each month. Each missed payment damages your credit score and makes future lenders regard you as a risky proposition for a loan.
When potential creditors evaluate a credit score, they want to see a record of credit activity as it demonstrates a pattern of behavior. From the way you handle your credit card debt, an institution can assess your financial responsibility habits. Rehabilitating a poor credit score takes time and is best avoided to ensure access to loans when needed.
Consumer protection
Many credit card companies have built-in features that their clients might not even know about. For example, it is easy to have a charge reversed if you buy something using a credit card and then discover the item to be damaged or of inferior quality.
Additionally, a credit card purchase often doubles the length of a manufacturer’s warranty when you buy electronics, appliances, and furniture.
Some credit cards also offer insurance for rental cars and travel. You would not benefit from it if you used your debit card to book a trip. In most cases, travel companies and organizations across the hospitality sector prefer payment via credit card. Credit cards are acceptable in most countries worldwide, meaning that you do not need to carry cash with you when traveling overseas.
