Not every decision to put it on your credit card is a bad one, in fact, using credit cards can be a smart move at times. Here is what a credit card can do for you.
Earn You Cash Back
One of the best perks ever invented by credit card companies is the cash back bonus. Even a simple 1 percent credit card rebate can be a big incentive, especially on large purchases. Lucky for you though, 1 percent is just the beginning. Credit card companies are now offering cash back rewards as high as 5 percent.
You can use these cash back bonuses to get a little back on daily expenses or to score a nice reward on a big purchase. Looking to drop 2000 dollars on a new sofa? Put it on your cash back card and get 100 dollars back in your pocket. Not using a card would be like leaving money on the table.
Get You Plane Tickets
Easily the second most embraced perk is the Frequent Flyer Mile. Who doesn’t love a free trip? Even if cash back would ultimately give you more money, the psychological value of miles is hard to beat. It both saves you money and encourages you to go on vacation. You can’t let those miles go to waster after all.
If you really want to take advantage of flyer miles and have great credit, sign up for a new card with an airline. Many airlines, such as Southwest Airlines will often have new member incentives. Just spend a certain amount of money in a set time period and you can potentially earn thousands of extra miles.
Security In The Form Of Chargebacks
If you pay cash or even check with a merchant, once those funds have cleared or left your hand, they are gone. What happens if there is a dispute? Perhaps a contractor does shoddy work or something you bought was not as advertised.
When you pay with a credit card, you can always ask your credit card company to step in. They can place a chargeback on the purchase and hold the funds until the dispute has been resolved. It is a great incentive for a vendor to do the right thing by clients like you.
30 Days To Pay
When you pay with cash, the money is gone immediately. When you pay with check, the money is gone in days. Credit card payments are different though, because you have a grace period.
In many cases, you will have up thirty days to pay the bill. That is like a free 30 day loan. You can get the benefit of having funds in your account for up to a month more while paying no interest. If you have an interest earning account, you could even earn money by using a credit card.
Help Building Credit
There is no denying that credit cards are a necessary evil if you want to build your credit. Simply having an account in good standing will improve your score but you can do even better if you continuously use your card. As your credit card issuer sees you using your card responsibly, they will increase your limit. The more credit you have available to you, the higher your credit score will be.
Hidden Perks
There are a lot of hidden perks that come with credit cards, many of which people are unaware of. Rent a car and pay with a credit card and you are likely to get secondary auto insurance. Buy a piece of electronics and you might get a complimentary extension of your factory warranty. Some of the perks associated with credit cards could surprise you, so give that list of benefits another look.
Use Your Credit Cards Carefully
The perks above are great and, if used correctly, can put hundreds of extra dollars back into your bank account. That being said, you must use extreme caution and be disciplined in order to use the safely.
There is a reason that credit card companies offer these perks. They want to lure you in as clients and get you to spend money. They can then earn a great deal of money off of the interest that they charge you. The catch is that they do not earn interest unless you carry a balance.
The mere fact that these perks still exist is that most people will carry a balance. They might plan to pay off the balance in full each month but lack the discipline to do so. People just like you, so be careful of this credit card trap.
