Advantages Of Using Credit Cards
Many individuals are nervous about obtaining a credit card. They may have heard horror stories of exorbitant interest rates and users drowning in financial debt. However, when used properly, credit cards can offer a user many advantages over traditional payment methods such as cheques or cash.
Credit cards are much safer to carry in your purse or wallet than cash. If you lose cash, you are out of luck. On the other hand, credit cards offer a much safer alternative. If your credit card is ever lost or stolen, you can contact the credit card company immediately. They will put a hold on your card which prevents anyone else from making any charges with the card.
In addition to the security of the card itself, most credit card companies also offer increased protection for your purchases. Many companies will extend the regular warranty of any products purchased using their credit card. This purchase protection option can provide you with peace of mind. You can often increase your warranty by two times with no additional charge.
Great For Emergencies
If you use cash, cheques or debit cards to make a purchase, you need to have sufficient money in your account to cover the amount. Credit cards can be very helpful because they provide you with a grace period from the date of your purchase before you need to pay. This can be great when emergencies arise and you need to purchase an item or service that you don’t have enough funds to cover. This gives you an extra month to gather sufficient funds to pay for your purchases and allow your money to earn additional interest in a savings or chequing account.
The longer payment period also means you may be able to purchase a larger item that you couldn’t otherwise afford. If you don’t have the sufficient money upfront, you normally have between 19-26 days to save enough for the items you purchased.
Learn Financial Responsibility
Credit cards are a great way for individuals to learn about financial responsibility. If you use a credit card properly, you should begin to make very small purchases and learn to pay them off as early as possible. If you pay your balance in full before the due date each month, you won’t be charged any additional interest.
As you become more financially responsible, you can progress to making larger purchases. Proving you can handle the responsibilities of using a credit card will also improve the score of your credit rating. This can be very helpful when you want to apply for a loan at your bank. In fact, most banks are much more willing to loan money to individuals who have owned and used a credit card responsibly. The higher your credit rating score, the better chance your bank will approve any requested loans.
The next time you’re contemplating applying for a credit card, think of the advantages this form of payment provides. Credit cards offer you increased security; they can be easily cancelled with a phone call and they offer purchase protection which can extend the warranty of any products purchased using the card. In addition to providing you with a grace period to pay for purchases, credit cards can teach you financial responsibility and improve your credit rating.