There’s a compelling reason why financial planning experts discourage the use of credit cards. Most of us get into financial trouble because of our careless use of credit cards. Credit card purchases are preferable to debit card purchases and cash transactions should be kept to a minimum, but this is contrary to common belief. Let’s take a look at the benefits of using a credit card, as well as some effective ways to put that card to work.
Reasons Why You Should Use Your Credit Card Instead Of Cash
Earn Flyer Miles
Generally speaking, cardholders earn miles at a percentage of one mile for every dollar in net items purchased, although some lower-end cards that do not charge an annual fee offer a rate of one mile for every two dollars spent. The amount of value that you actually receive from this reward is directly proportional to the class of airline ticket that you buy with your points or miles. The mileage-based introductory bonuses that come with many frequent flyer cards immediately multiply the value of those cards by a significant amount. After you have met the minimum spending requirement for the card, these are frequently sufficient to put you between 50 and 100 percent of the way toward an award flight.
They Don’t Take Your Money Right Away
When you make a transaction with a debit card, the money is deducted from your account almost immediately. When you make a payment with a credit card, the money that you spend stays in your checking account until you pay off the balance on your credit card.
Cash Back
Discover is credited with popularizing cash-back credit cards in the United States for the first time. The concept behind these cards was straightforward: Customers who used the card received a cash rebate equal to one percent of their total purchases. The idea has developed and progressed to its current state today. Some credit cards now provide 2%, 3%, or even up to 6% cash back on particular purchases; however, these enticing offers typically have limits on the amount of money that can be spent monthly, quarterly, or annually. Credit cards that offer the highest rewards rate while also charging a low annual fee and minimal interest are considered to be the best cash-back cards.
Earn Reward Points
Credit card companies typically provide their customers with the opportunity to obtain one or more points for each penny that is spent using their cards. The majority of credit cards that offer rewards will award bonus points for specific types of spending, such as at restaurants, grocery stores, or gas stations. When a certain amount of earnings has been reached, points can be exchanged for trips, gift certificates from stores and restaurants, or merch products through the online rewards portal provided by the credit card issuer.
It Comes With Free Insurance
The majority of credit cards instantly include a variety of consumer protections that people aren’t even aware they have, including such insurance for rental cars, insurance for travel, and so on. It depends on the credit card issuer which insurance is included in the credit card they’ll give you. Each credit card has different advantages.
It Is Accepted Worldwide
There are a few acquisitions that are challenging to make with a direct debit. If you want to book a car rental or stay in a hotel suite, having a credit card will almost certainly make the process simpler for you. Credit card payments are preferred by hotels and car rental agencies because it simplifies the process of charging customers for any damages they may cause while renting a car or staying in a hotel room. One other reason is that the retailer is unable to provide an accurate estimate of the total cost of your transaction unless you have already paid for your car rental or hotel stay in advance. Because of this, the retailer needs to reserve a certain amount of your available credit line in order to safeguard themselves against the possibility of incurring charges that they had not anticipated.
Reasons Why You Should Use Your Credit Card Instead Of Cash
