Credit cards are incredibly useful- they are plastic cash, the cash of the new generation. They can be used as a substitute for cash is most situations and they can be used in places where cash cannot be sued, such as online shopping. Before one gets a credit card, they must know about the benefits of credit cards and the various ways in which they can use credit cards- such as getting a cash back or a frequent flyer credit card.
Credit cards do have some disadvantages, but when one figures out how to use credit cards right, they will realize that the advantages definitely outweigh the disadvantages. Here are a few places where you can use credit cards to your advantage:
- Use it more than you use cash: Well, before we talk about why you should use credit cards more than cash, we also need to talk about how you need to come up with a budget. You know that you don't have to repay your credit card bill till the next month, but you have to keep in mind that you must have enough money the next month for you to meet this payment. So, as long as you have a ceiling and you are spending within it, it would be wiser for you to use your credit card more than you use cash or debit card. By doing either of the latter, you are going to be digging into your account and your savings, which can be avoided by using credit cards. This will also help you build a better credit rating.
- Use it for online shopping: Online shopping is certainly becoming more popular than actual shopping nowadays. When it comes to choosing between paying by your credit or your debit card, it would be better for you to choose the former option. If you know how to use credit cards, you know that this is the simplest way to shop online.
- Use your credit card to buy flight tickets: Frequent flyer credit cards are commonplace nowadays and you must use them to the best of your advantage. By using your credit card more often, you will be able to collect enough points to avail you a discount or even a full trip on flights.
Advantages of Credit Cards
Now that we have spoken about places where you can use credit cards, it is time to talk about the advantages of credit cards. Unless and until you know about the scope of the benefits offered by this plastic, you won't be using credit cards right.
- Avoid fraud with credit card: This is in comparison to debit cards, and not cash. Using credit cards can really help a person remove a lot of chances of fraud. Agreed, when a debit card or a credit card gets lost, the problem would be the same, and the solution would also be somewhat the same. You know how to use credit cards, so you know what to do in case your credit card gets lost. If either card gets lost, you have to call the company and get your card blocked. If you have lost your debit card, you have to make sure that you block it immediately and if some expenditure has been made, you have to convince the bank that you did not make the expenditure yourself. You won't have to face this problem with credit cards, for once you have asked for your card to be blocked, the bank itself will talk things out with the merchants to find out what you bought and you didn't.
- Keep the money safe in your account: As we have already mentioned, when using debit or credit cards, you will be directly digging into your savings, which is not a good thing. One of the advantages of credit cards is the fact that you won't be digging into your existing resources, but your potential sources. The benefits of credit cards stem from the fact that you don't have to cripple yourself and split your account at the end of the month. This is another reason why when using credit cards right, you will be able to protect your account of being completely stripped off money in case the debit card gets stolen. In case a credit card gets stolen, you won't have to spend a penny till the bill comes and you will be able to fall back upon your savings for the rest of the month.
- Be more organized about your spending: One of the benefits of credit cards is the fact that it enables a person to track their spending without too much trouble. It will be very easy for one to use credit cards right, just with the help of a program like Microsoft Money. This kind of financial management can really come in handy.
- Get cash back and reward points: When you are using credit cards right, you will be able to get maximum benefits from it. One of the pros of getting a credit card is the little fact that there are many cards that offer reward points. After every purchase made, the person holding the credit card will get a few reward points depending on the amount of money he/she has spent. After collecting so many reward points, one will be able to redeem them for other things. Usually, these reward points are redeemed for things approved by the bank, given in the form of a catalog.
- Frequent flyer miles: Another one of the huge pros of getting a credit card, especially for people who travel a lot. We just explained how the rewards system works- the frequent flyers system works in a similar way. Collect frequent flyer miles and you will be able to use these ‘reward points' for free travel or many other such things.
- Look at the fine print for more benefits: These are the broad benefits of credit cards. However, there are benefits of credit cards that are more or less hidden in the fine print. Here are a few examples of such pros of getting a credit card:
- There are credit cards that can keep a track of the guarantee period of the goods bought with that particular card.
- There are cards that give travel insurance when you book a flight ticket with your card.
- A huge advantage of credit cards is the fact that there are some that provide people with special offers of travel insurance, assistance, travel planning, emergency assistance, car rental insurance etc., all of which can come in handy.
- Easy to pay off: We know that credit card debt is a huge problem, but such problems only arise when one does not partake in proper economic planning. It is quiet easy to pay off a credit card as long as you make sure that you do not spend more than you earn.
- Credit cards that come with no interest rate: Of course, can one be using credit cards right if they spend a ton of money in the form of interest? No. However, there are 0% interest credit cards. Usually, these are offered to people who have stuck with one bank for a little while and have proven their trustworthiness.
- Special offers and deals: A lot of credit card companies actually collaborate with some other companies to develop exclusive deals and programs for people who own a particular bank's credit card. This collaboration would make sure that you get a discount or an offer every time you shop at a particular store with this credit card. Of course, the places where you would get special discounts would be limited to the places the bank is in collaboration with, but hey, good offers are certainly one of the best advantages of credit cards.
- Protect the right prices: There are credit cards that come with price protection net, so that one can be assured that they get the justified rate for any commodity they have bought. Say, you have bought something for a sum of money, but in a month or so, the price drops drastically, for no justifiable reason. In such a case, if your credit card provides you with credit price protection, you will be able to get your money back (if you made the purchase with your credit card).
- Cash back: This is one of the offers that one can avail of with the help of the right credit card. The credit card companies usually get into collaboration with some stores and when you use your credit card to buy something in that store, you will be able to get a cash back.
- The simplest reason: It can be quite cumbersome to carry cash around. One might not have cash on them at all points of time and they might not have a source to withdraw money from. Credit cards can act as a wonderful replacement because of their simplicity of use and the fact that they provide for automated billing.
These are just the few, basic pros of credit cards, but this should give one enough information about the benefits of credit cards and why they should get them.