Credit cards used to get a bad reputation, often giving the perception that if you’re using a credit card that you do not have the money to make the purchase and that you’re going into debt. While that may be true for some, those that are in debt, but for the rest, using a credit card can actually be a great financial decision to make, not only using, but for every purchase that you make in a month going forward.
Best Bet for Protection from Fraud
You never know when your card can be compromised at the gas station or when left out when paying for a tab, or even worse be part of a retail store hack, but instead of using a debit card and risk your bank account getting wiped out when fraudulent activity occurs, at least have it been a credit card so the charges can sit in pending status on your credit card. With a debit, your bank account will remain empty until the money is returned to you, and who knows how long that will take for the credit to come back.
Builds Up Credit History & Score
By charging up your account throughout the month and then paying off by the statement balance you are building up a solid payment history. As you continue to charge and pay off you will likely get your credit limit increased, which then will increase the window between your debt and available credit, which both will lead to your increased credit score. Having an excellent credit score will help you secure the most favorable rates on the market when looking for a mortgage, loan, or credit card, and can significantly reduce monthly payments with a lower interest rate. After all, the goal is to pay as little interest as possible.
They’re Easily Accepted Everywhere
Sure, debit cards are accepted just about everywhere as well, but the difference is, when you use a debit card to book a hotel room or rent a car, they will put a large hold on your card to ensure you have the funds available in case of damages, and can take a week or two to come back into your bank account. With a credit card, the hold will be less, but you also will not have to worry about any hold having an effect on your balance, as it will come off before the statement balance is due anyways.
Watch the Rewards Add Up
While there are many great reasons to use a credit card, probably the greatest is the rewards that come in the form of points, dollars, or even miles by making purchases on your account. The great thing about this, is that if you just stick to the necessary purchases that you make in a month anyways, you are earning free money. It’s where you go on a spending spree just to earn rewards is where you can get yourself in trouble, especially if you can’t pay the balance by the due date and start paying interest, defeating the purpose of rewards.