Some might be surprised at the basis of this article, seemingly supporting charging up your credit account, but the kicker is that whatever you charge in the given much you’ll need to pay off the full statement balance, otherwise you will begin to be charged interest when your carryover a balance. If you start paying interest it sorts of defeats the purpose of using a credit card, so maybe you should stick to debit. If you are able to curb your spending, then actually using a credit card makes great financial sense and there can be plenty of benefits to not only using a credit card, but using for every purchase that you make. With so much competition out there, be sure to select the credit card with the best deals for you.
Improve Your Credit Score
If you are planning on buying or refinancing your mortgage, leasing a car, taking out a personal loan, or opening up a new credit card, then you want to make sure that you’re able to take advantage of the best interest rates on the market, otherwise you could be wasting money away every month on interest. By charging and paying of the balance every month you can develop a solid payment history and with increased credit limits, could increase the window between debt and credit limit, but just be careful not to charge to your limit or that could actually reduce your score, depending on when reporting to the credit bureaus.
Protect Yourself Against Fraud
Within the last year I have had my card compromised at the gas pump, and also when I likely left the card out too long when paying a tab at the bar, that you want to ensure you use your credit card instead of the debit card going forward so that if it does happen, your bank account isn’t cleaned out while you wait for the charges to be reversed. At least with a credit card, they can sit in pending while being disputed and you won’t have to worry about being responsible for.
Pay Back Next Month
This can be a pro or a con, depending on how your spending habits are. Credit cards are nice because you can charge up your account and not have to worry about paying back next month, having a couple paychecks to wait and receive before you have to pay back. That can be a downfall for some though, if your spending gets out of control, you may be in for a shock when the bill comes in and have trouble paying back the full statement balance, and be charged interest if cannot pay in time.
Last summer I had rented a car to drive from Ft. Lauderdale to Key West, and once we arrived to Key West it was parked for the duration of our stay. When we arrived to our car when checking out, there were scratches all down the side. When I turned the car in, of course I was told I’d receive a bill because technically it was “my fault”. What I found out though is that my credit card actually had coverage that covered the rental damage, so it was nice not having to pay the thousands that I received the bill for, which seemed over the top anyways.
While you can also use a debit card about everywhere as much as a credit card, it actually makes it a little easier to use a credit card when it comes to renting a hotel or rental car. If using a debit card, you’ll likely be charged a large hold on your account, that could take a week to come off afterwards, higher than a credit card, but at least on a credit card, must like disputed fraud charges, you will not be responsible for the hold charges, and can wait for them to fall off.
Cash Back Rewards
Probably saving the best for last, what really got me hooked on credit cards were the cashback rewards. Depending on the card, you can earn points, miles, or cashback just by using the card, so if you only stick to the necessary purchases that you were going to make anyways, you are making free money. So, on top of all the perks that credit cards do offer, making free money just by making purchases could sweeten the deal. It can be easy to start using the card just to earn rewards, so just be sure to keep spending to the necessary expenses.