Using Credit Cards To Your Advantage


A lot of energy is spent by the personal finance experts for preventing us from making use of credit cards – and, there are some valid reasons behind that. These are abused by many folks who suffer from debt in the long run. However, in case you are capable of using the plastic sensibly, it will be possible to use the credit cards to your own advantage.

In the following paragraphs, we have listed how credit cards can help us in various ways.

1. Signup Bonuses

Applicants having good credit score can be eligible for credit cards offering signup bonuses of somewhere in between $50 and $500 (at times even in excess of that). Other cards welcome the newcomers by offering them a lot of reward points which they can redeem for some fun stuff. On the other hand, a debit card which is available along with a bank account will offer no cash at all plus minimal rewards or nothing at all.

2. Rewards and Points

A lot of credit card incentives function on a point system, where it is possible for you to earn as many as 5 points every dollar spent. At times, you will be offered a special 3-month promo period in which case spending in a particular field like transportation or eateries will let you get twice or 3 times the normal points. Upon reaching a particular point threshold, it will be feasible for you to redeem the points for gift cards or you can even purchase items from the online rewards catalog of the credit card company.

3. Building credit

It will be helpful to use a credit card responsibly in case you do not have any credit or when you build your credit score, given that your payment activity will be reported by the credit card companies to the credit bureaus. The advantage of credit cards over debit cards is that the latter cannot aid you to improve or build your credit since the use of a debit card will not appear on the credit report whatsoever.

4. Safety

It will be easier to avoid losing to fraud once you start paying with a credit card. When your credit card is used by a thief, you will lose cash from your account immediately. Legal expenses for which you have mailed checks or scheduled online payments might bounce leading to inadequate fund fees thus making your creditors dissatisfied. Although it might not be your fault, your credit score can be lowered significantly by these missed or late payments. The fraudulent transactions might take some time to get reversed along with the cash restored to your account while the financial institution investigates.

On the other hand, you will not run out of cash once you use the credit card fraudulently, and you simply inform the credit card company regarding the fraud and do not pay for the transactions not made by you while the matter is resolved by the credit card company. In case you maintain discipline and don’t spend in excess of what you earn, your credit card will be extremely useful to you in the long run. Nevertheless, you need to be meticulous while using credit cards and with a bit of planning, credit cards can do a world of good for you.

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