You may have been warned against the use of plastic money for several good reasons. Some users use the cards irresponsibly thereby ending in huge financial trouble. However, when you use the cards in a responsible manner, there are many advantages.
Here are five reasons to use credit cards.
Rewards points
Rewards are one of the biggest benefits of paying with a card instead of cash. Most cards offer points for your purchases. Card companies also provide promotional offers that enable you to accumulate higher reward points. You may redeem the points against items on the issuer’s site or at partner stores. For reward point I would strongly recommend American Express Card.
Frequent flyer miles
When you use your credit cards to purchase an airline ticket, you receive miles. Moreover, frequent flyer cards often provide signup bonuses, which are highly valuable. You may be able to accumulate enough miles that may be redeemed to purchase your next flight ticket.
Security
If your debit card is stolen and used, the money is immediately gone from your bank account. The online scheduled payments may bounce in case of a stolen debit card. Missed or late payments may negatively impact your credit score. The fraudulent transactions may be reversed after a time delay. However, if your credit card is stolen, you may immediately report the same to the issuer. In case any transactions are made, you do not have to pay for these until the matter is resolved.
Grace period
As already mentioned when you pay with a debit card, the money is immediately taken out of your account. However, when you use a credit card, you make the payment only after the due date on the completion of the billing cycle. Having these funds for a little extra time helps you beat inflation (even if it is small) between the purchase and payment dates. Moreover, the money remains in your bank account and earns some interest during this period.
Building credit score
When you have no credit history and want to build a good score, using plastic money in a responsible way is beneficial. When you make timely and full payments of the bills, it is reported to the credit rating agencies. As a result, it is helpful in building a good credit score. Generally, when you have a higher score, you are able to avail of competitive rates of interest on facilities like home or auto loans.
However, paying with a card is not always smart. Some retailers may offer discounts if you pay with cash because they save the costs that are otherwise paid to the card companies. Moreover, if you are unable to pay the entire bill on its due date, you must avoid using a card.
Cards are beneficial when used in a disciplined manner. If you are a responsible user, you will be able to benefit from several advantages as mentioned above.
