Reasons why you should add a credit card to your wallet
Credit cards can be a very useful tool if used wisely. These credit tools can add flexibility to your spending habits, protect you in the case of fraud, as well as build your financial portfolio for years to come. By carefully adding the right credit cards to your wallet, you may very well benefit now and in the future. See below for some of the most beneficial aspects of credit cards.
Opportunity to build credit
A credit card can be a great tool to start building credit. While it’s likely you had a bank account and linked debit card which you used for years, these financial tools do not report to credit bureaus and do not help you build your credit. Using the proper tools is crucial to show financial institutions you have a track record that would give them comfort in extending you credit. By using and paying off your credit card time, your credit score should build as your trust with institutions grow.
Earn rewards such as cash back or miles points
Many banks are willing to provide a large, upfront offers to attract new customers in what are commonly referred to as sign-up bonuses. See article on “why credit card companies offer credit cards”. These offers are typically in the form of miles, points, or cash, each with their own benefits (insert article on differences). It’s important to know which form of currency is best for you. These bonuses are typically very lucrative to the consumer, and if used correctly can help you travel, grow savings, and begin the journey to building credit.
Protection against credit card fraud
One of the best aspects of a credit card is that cards are not linked to any checking accounts or other assets you may own. As a result, if your credit card information were to fall into the wrong hands and unauthorized charges were made, you have 60 days to dispute these charges. Banks are unfortunately all to use to seeing these types of charges and are very accommodating to remove any unauthorized activity. When fraudulent activity occurred related to your bank account or other personal assets, it can be much tougher to recover once the assets are one. By using a credit card, you shield your cash held in banks and assets elsewhere.
Benefits while traveling
Credit cards also show to be beneficial while traveling. Many cards allow you to charge the local currency to your card, which can avoid any conversion fees charge by merchants. In addition, many cards waive all foreign transaction fees as part of their benefits. Carrying a card both locally and oversees also eliminates the use to carry excessive cash, which could cause troublesome in the case of a misplaced or stolen bag or wallet. In additional to convenience, many hotels and vehicle rental companies require a credit card on file to reserve or rent a room or vehicle. This practice is commonly used by these companies to safeguard the assets should they be damaged during your hotel stay or vehicle rental.
Increased spending power
A well-known benefit of a credit card is the ability to use borrowed funds for large purchases. While you should also be sure to have a plan to pay off your debts, there are some situations like paying medical bills or home reservations, where having immediate access to a large amount of funds can be both useful and necessary.
Free credit score information
Many card issues now offer credit score monitoring as part of their services. While these monitoring series are not likely to be as accurate as requesting a report from one of the three credit bureaus, this service can be a great tool to track your credit.
The above list is just the start of the benefits credit cards have. Some may be more useful than others and it’s important to determine which card is right for you based on the benefits you’re looking for. Overall, the benefits in general are to benefit you, the consumer. Let me know what you’re looking for in a card and we can get you on the path to success.
