Why You Should Use Your Credit Card to Pay for Everything
While nearly each one of us has a debit card, a credit card has also adopted a commonplace status not just in US but also in developing countries. We naturally use debit cards, because the money attached to the debit card is equivalent to our bank balance. In case of credit cards, we use borrowed money from the bank depending on the credit limit given to us, to spend on various purchases. Credit cards are fast becoming even more popular than before, because of a huge range of attractive benefits tied to the spend.
Here are why one should use credit cards to pay for various purchases
- Discounts and Deals on Purchases - There are many online shopping sites and even brick ‘n’ mortar stores, grocery outlets and restaurants which offer discounts on using credit cards. You may feel that these discounts are not much but if you really check, they do make a difference; when you add up all the good deals and discounts you get on eating out, buying clothes, subscribing to a service, making travel purchases, buying necessities or purchasing movie tickets. Plus, you can exercise the EMI option through credit cards and buy that costly item at zero percent or negligible interest rates.
- Reward Points - Credit cards have the system of reward points which are an incentive for people to make credit purchases. You get loyalty points which may be simply reward points or air-miles, which can be redeemed to buy merchandize or buy airline tickets.
- Cash Back - There are specialized cash-back credit cards as well as regular credit cards which can be used for cash-back at certain outlets and online programs. Isn’t it better to get some cash back every time you purchase something, which can be used to save money and add to other purchases, instead of getting nothing for spending?
- Insurance – Bank cards or credit cards offer insurance like a health cover, accident insurance, travel insurance, baggage protection or coverage of lost or stolen items for being their valuable customers. The benefit is that most of these features are given as value-additions at discounted rates to credit card customers.
- Security - If there are errors or discrepancies in a purchase or transaction, it comes up in the statement, which you can take it up with the credit card company. Also, whenever they are high-valued transactions, the credit card company will call you up or ask more verifying questions to know if you are the one initiating those transactions. If someone has swiped your credit card without your knowledge, you can take it up with the credit card fraud reporting team.
- Financial Discipline – We don’t tend to look into our bank statements even if they are emailed to us, but we will always look into our credit card statements, because we have to pay the outstanding balance. While going through the statement, we may notice quite a few transactions that are out of place, which was not necessary, and which can be stopped. We also understand various fees like late fees, finance charges and even credits that are earned. A progressive habit of keeping our finances in order seeps into our psyche due to regular credit card usage.
- Travel Benefits - When you arrange for a visa for travel to foreign countries, one of the strongest assets is the international credit card. This helps the officer know that you have the financial leverage in case of unforeseen events. It goes without saying that you get substantial discounts when you book a flight or hotel with a credit card. Certain credit card also offers low interest rates on purchases abroad, than a conventional debit cards.
- Credit Score – If you have a credit card and make regular payments on time, your credit score gets a boost. Higher credit score means lower interest rate payments, which you can benefit from, when you apply for any big-ticket loan like a housing loan, mortgage or auto loan.
From the above points, it is evident that we should use credit cards for the significant advantage it has over cash, debit card and other modes of payments. Having said that, all the above rewards are beneficial only if you use the credit card responsibly and make regular payments to avoid credit card debt. So, just keep it simple – use your credit card judiciously and in line with your spending habits in such a way that you are able to pay them off in full, before the due date.