Today, there is a greater chance of finding a credit card rather than cold hard cash in a consumer's wallet. The popularity of credit cards has surged for a number of reasons beyond the fact that they are a convenient payment mechanism and allow you to buy now and pay later. Here is a rundown of the reasons why you should get a credit card.
- A credit card enables you to build credit, which is necessary at the time of taking out a loan for a big purchase such as a home or vehicle. Responsible use of credit cards has helped consumers build a solid credit history and the advantages that come by being a low-risk borrower.
- Credit card payments are universal and ubiquitous. You can use them to pay for groceries, book your flight tickets online, rent a car on vacation in a foreign country – the possibilities are endless. It is easier to carry your credit card for various or substantial payments rather than stuffing your wallet with cash or remembering to bring along your check book.
- A credit card is invaluable during emergencies. If you're stranded during a road trip and need roadside assistance, a credit card will definitely come in handy. It is also useful when you have to pay for travel insurance or a medical situation that cannot wait.
- Credit cards offer a higher level of security than cash. You cannot get back stolen or misplaced cash, but you can have a new credit card reissued within a short period with no monetary loss. When you detect questionable charges or fraudulent activity on your card, you can report it to your issuer and have the card deactivated.
- Credit cards can make you eligible for rewards such as discounts, cash back, airline miles. There are dedicated rewards credit cards from issuers that earn you reward points for shopping at select partners, card activation and earn you a better rate of points for every 'x' dollars spent on purchases. By researching various offers across issuers and comparing credit card rates, you can identify the best money-saving deals.
When chosen smartly and used judiciously, credit cards can serve as an excellent financial tool. Ideally, you shouldn't carry a credit card balance from month to month, and commit to at least maintaining a low balance. Use a credit card calculator to determine the interest, length or monthly payment to pay off the balance on the card.