7 Benefits That Come From Using Credit Cards

There are those who swear off credit cards because of the risk of getting into too much debt. That’s a fair point. If you’re not diligent about using your credit cards wisely, you can get in over your head. But, charging what you can afford and paying your full balance each month allows you to safely avoid the risks of credit card debt. The benefits of using a credit card are worth it.

Fraud protection. Credit cards offer more protection against fraud, than cash and debit cards. Many credit cards comes with zero fraud liability which removes your liability for any unauthorized purchases made on your card. On top of that, federal law limits your liability for purchases made on your credit card. There are laws that limit debit card liability, but the amount you’re liable for depends on how long it takes you to report debit card fraud. You could be on the hook for all unauthorized purchases made on your account if you wait too long.

Credit boost. Credit cards give you a chance to build your credit history. Since most major credit cards report to at least one of the three major credit bureaus, using your credit card wisely will help you work towards an excellent credit score. Building a solid credit history helps you qualify for other loans – like a mortgage or auto loan – and helps you qualify for a low interest rate.

Credit card rewards. You’ll have a chance to earn credit card rewards. Perhaps the best benefit of credit cards is the ability to earn rewards on all your credit card purchases. There are credit cards that offer cash back, points, and miles on your credit card purchases. The more you spend, the more you can earn, but it’s important not to overextend yourself just to earn rewards. If you’re a big spender, you can earn rewards to use for travel, hotel stays, gift cards, and more.

Travel benefits. On top of earning rewards to use for future purchases, many travel rewards credit cards offer additional travel perks. For example, you may have access to airport lounges, complimentary companion tickets, hotel upgrades, waived luggage fees, and more. Travel perks vary by credit card so make sure you read the fine print of any credit card you’re considering.

Additional protection for purchases. Your credit card may come with purchase protection and extended warranty. These perks give you added protection for the purchases you make on your credit card. Purchase protection kicks in whenever a purchase is lost, stolen, or damaged. And extended warranty stacks on top of the manufacturer’s warranty protecting your purchases for just a little longer.

More spending flexibility. Credit cards are more convenient for car rentals and hotel stays. These companies typically placed an authorization hold on your funds whenever you reserve a car or book a room. Some companies allow you to use a debit card, but may hold additional funds for several days. Using a credit card keeps the money in your checking account free for purchases whenever you’re traveling and need to rent a car or book a hotel.

Recourse for fraudulent purchases. Your credit card also gives you the ability to dispute charges when a merchant doesn’t deliver the services as promised. This helps you hold merchants accountable or get your money back from your credit card issuer if the merchant tries to defraud you or doesn’t provide the services they’ve guaranteed. You don’t receive the same protection with other types of payment methods.

Of course, the best benefits come when you do your homework and shop around for the best credit card for you. Pay attention to the rewards and benefits and match them to your typical spending habits. Once you’ve picked the best credit card, be sure to spend and pay responsibly to build your credit and stay out of credit card trouble.

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