Why use credit cards? Debit cards and cash may appear to be a more convenient payment option for those looking to stick to a strict financial plan. After all, credit cards have a bad record for tempting people to make impulsive purchases when they do not have cash on hand, especially when appealing offers are sent via snail mail.
However, if you ask us, we think that an awesome credit card is a must-have. Credit cards, when pretty much used responsibly, can greatly improve your financial standing. The savvy credit card user can actually make money by simply using their card. So, enough beating around the bush. Below we will go over some of the benefits of using credit cards rather than cash:
Building credit history
Having a credit card allows you to establish a payment history, which is arguably the most crucial benefit.
You can use a credit card to improve your credit rating even if you do not have good credit right now. A secured credit card is a good option for those with a low credit score. Because of this, credit cards are a wonderful option for people with little or no credit history.
To be approved for a loan, you need a high credit score. Credit card behavior accounts for a portion of these ratings. Building up your credit history can be aided by responsibly using credit cards.
The bank updates your credit report to reflect your positive payment history when you pay at least the minimum due every month.
Creditors will look at your payment history when you apply for future loans or credit. You can increase your credit score by using credit cards responsibly over time. Check out this link for additional info https://www.pymnts.com/credit-cards/2023/gen-z-millennials-use-credit-cards-30-more-than-the-average-cardholder/.
Rewards programs
Earning rewards is a major perk of using a credit card. Do you want to hear an interesting fact? If yes, then you should know that the number of rewards programs is rapidly approaching the number of credit cards. The key is to enroll in a loyalty program that works with the way you already shop. You can easily rack up reward points without altering your usual buying patterns at all.
You should also look for a loyalty program that offers tangible benefits. A credit card that offers travel rewards may be more beneficial than one that offers cash back, but both are useful. But if you rarely leave the country, a credit card with travel perks is not worth your while.
Fraud protection
When compared to debit cards, credit cards offer significantly more protection against fraudulent charges.
Let us pretend someone steals your credit card or snatches your account details off the internet. To make matters worse, if the thief begins making purchases, they are not doing so with your real money.
The credit card provider will suspend your account and initiate an investigation when you report it stolen. In the interim, any fraudulent purchases made will not be your responsibility. You will not lose money because of credit card fraud because of federal law protections. Almost all credit card companies offer a “zero liability” policy in the event of fraudulent use, so you will not be out of any money.
What if someone steals your debit card? Unauthorized purchases made with a debit card result in an immediate loss of the purchased amount.
Scheduled payments could go into overdraft status. Within 60 days of discovering the theft, you can have your money returned if you report it to the police. The process is time-consuming and can be more inconvenient than credit card theft. Read more on this page.
Balance transfers allow you to lower your debt rate.
First things first folks. You should know that a 0% APR promotional period is a common feature of credit card sign-up bonuses, and it often applies to debt transfers.
You can switch your credit card debt from one card to another by requesting a balance transfer. You can use a balance transfer credit card for everything from your auto loan to your monthly installment payments. Keep in mind that doing so typically incurs a balance transfer fee, with 5% being the usual average.
This, however, does not mean that the debt is completely wiped out, no matter how much you want it to. Of course, you will still have to take care of your remaining debt. But the good news is that since the introductory APR is zero, all payments you make during that time will go directly toward reducing the principal balance owed, rather than accruing interest.
The amount you can move to your new credit card will be determined by your available credit. Even with 0% interest, credit card debt might be difficult to repay if you keep charging increasingly each month.
But if you use balance transfers sensibly, you can simplify your financial life by consolidating your debt and reducing your interest payments. Sounds awesome, doesn’t it?
Grace periods
Credit cards, in essence, provide a short-term loan with no interest if paid off within 30 days. Credit cards allow you to make purchases without immediately accessing cash from an account. There is a buffer zone in which you can work out payment terms.
The 30 days that follow the close of a billing cycle are considered a grace period. There will be no interest added to your account during this time. However, you are required to make a complete payment on the outstanding balance by the due date. If not, your account will be charged with all of the interest that has accumulated.
Our advice to you folks is to use this grace period to your advantage! The interest-free grace period ends regardless of whether you pay the bill in full by the due date or make any partial payment.
Tracking your spending
“How should I have more control over my spending?” Do not worry because there is a way you can plan your budget better than before.
The statements that come with credit cards include a built-in expense tracker. Your purchases are logged online along with all of the pertinent information, including when, where, how much, and how frequently you are spending money.
Oh, and do you know what else? There are credit card firms that store your purchase history for an extended period of time.
When it comes to filing taxes, this perk is extremely helpful. You will save time and work on your taxes if you have already established a record of the spending you made throughout the previous year. On a credit card bill, you will see items such as business expenses, spending related to rental properties, charitable contributions, and other items that can complicate tax returns.
Should I use a credit card calculator?
Now this is an incredibly good question for credit card users, and the answer is yes!
You can think of the money you spend on a credit card as a loan. You can buy now and pay later with them, and they also provide you with some form of consumer protection.
Do not be blindsided by their power because credit cards can also be dangerous for your financial health. Yikes! But do you know what is awesome? All you need is a good kalkulator for kredittkort or a credit card calculator to help you avoid getting stung by so much debt!
We can all pretty much agree that a missed payment combined with the exorbitant interest rates available today can quickly spiral out of control. The calculator can be used to estimate monthly payments on a new credit card or to determine how quickly outstanding balances can be paid off.
You can enter a number of cards and see how changing the payback amount impacts the total time it takes to pay off the debt and the amount of interest paid.
