Credit cards are often associated with having bad personal finances and viewed as a cause of long-term debt. However, this is not true. If they are used well, a credit card can offer many perks and may even help you to take control of your finances. Surprised? Find out more through the 5 benefits below.
5 Ways You Can Benefit from Using Credit Cards
Your Spending is Protected
You order something online, but it arrives damaged or does not meet the description. You are able to reach out to the business to try and resolve the issue, but they are refusing to help. What do you do?
If you bought these goods with your credit card, then you can turn to the credit card company for help. This is because purchases made on credit cards have more protection than debit cards. Including chargebacks, so you’re covered when something goes wrong. It is often better to make larger purchases on your credit card and then pay this off as soon as you can, this way your purchase is protected.
Boost Your Credit Rating
Many people are accepted for a credit card but are then reluctant to spend. Fearing that it could damage their score. However, by spending and making monthly credit card payments, you are proving you can borrow responsibly. This means that even if you have bad credit, you could use a credit card to improve your rating. This is important because boosting your score could help you to secure better loan or mortgage rates in the future.
It is worth making monthly purchases on your credit card, even for small amounts (such as 1 meal out a month) and then paying it back when your statement comes in. This shows that you are responsible with your lending and you’ll be thankful at a later date as this will build your credit score.
Enjoy Interest-Free Periods
The majority of credit cards come with an opening offer. Such as an interest-free purchase or balance transfer period. This means you can build your credit score without having to pay any interest. As long as the balance is cleared before this period ends.
In addition, if you clear your credit card by paying off the full balance within the same month or statement period. You could receive further interest-free periods from your credit card company. They will see you as a responsible borrower and offer you extra incentives to spend with them.
Consolidate Your Debts
If you have other cards with a high annual percentage rate (APR), you could be spending a lot on interest. This is where a low-interest credit card could help you manage your finances. With cards that have zero percent balance transfer rates, you can move your existing debt onto one card and eliminate interest charges. Potentially reducing your monthly payments.
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Earn Rewards on Credit Card Purchases
Depending on the credit card you have or choose to apply for, your spending habits could mean you qualify for rewards. These will vary depending on your credit card company but can include everything from Avios air miles (which The Social Media Virgin discusses in more depth in how to get flights for free). You can also get cash back on purchases. With reward cards, you will also be sent vouchers and access to point-based reward schemes. As such, this could help you save on everyday spending.
Finally, to get the most from your credit card. Compare cards to make sure you get the best rate and always use an eligibility check before applying, to avoid damaging your credit score.
Have you got any top tips or benefits of your own? Let us know below.
