In this article, I’m going to breakdown some of the greatest uses for a credit card and how they can benefit your life when used properly.
So you’ve probably heard of credit cards being “risky” or “dangerous” things to own.
This is crap. Credit cards offer so much value its not funny. As long as you know how to use them.
If you have a budget plan, its easy to get yourself a credit and start using them the way that there meant to.
This article I’ll demonstrate the amazing benefits of using a credit card
All the pros of using a credit card
Here I’ll explain all the advantages and the great uses that come with credit cards and how they benefit you over other more traditional payment methods!
1. Building your credit score
Want people to trust you? This is, in my opinion, the greatest use and reason for a credit card, establishing a good credit history.
In life, it pays to show people you’re a responsible person with money, and there’s no better way to prove it than by having a good steady credit history. With this trust, banks will always be happy to give you money for a home loan.
Now it’s much easier to begin building your wealth through real estate or starting a business!
2. Earning rewards and benefits.
Probably the greatest uses for a credit card is the free stuff they buy you. Credit companies have schemes where every dollar spent you get a certain number of points back that you use for perks like gift cards, cash and plane tickets to destinations of your choosing.
When you sign up for a credit card some companies run 3 month promo periods where spending a certain amount will net you 2 or 3 times the points.
It’s awesome because you were just going to buy those things anyway, now just use your card and get rewards.
3. Interest-free days
When you use a credit card, typically they charge you interest to use their credit. Whoever, most companies offer interest-free periods where you will not be charged for a period of time as long as you pay the amount owing in full. Usually, 55 days is typical.
4. Flexibility on Purchases.
Like getting things sooner than later? If you know something will benefit you it’s sometimes just convenient not having to wait for it.
It suits me a lot when you avoid the headache of worrying about your balance each time you spend. Just buy what you need then worry about paying the balance at the end.
Have you noticed wherever you shop or travel overseas nearly all businesses accept credit cards? Businesses around the world want to offer a more flexible, safer way to offer their services. The credit card system is a fluid way to receive payments.
So picture this for a second, you’re stranded somewhere in a foreign country with no money, you’re in a bit of a pickle! Pull out your credit card and you should be able to get out of most situations, then worry about paying it off later.
It’s good to use your money last!
5. Zero Interest Balance Transfers
This is a real lifesaver and another great use for a credit card.
Zero-interest balance transfers mean if you’ve got debt owing on a card charging you interest you can just switch it to another credit card company interest-free! They’ll forgo the interest from 6 to 12 months, giving you time to get out of debt without paying interest.
So if you’re paying a lot in interest from your debt, just move it to another company!
6. Security
Credit cards have a lot of security features and make you more immune to fraud.
If your debit card is used fraudulently your money disappears immediately.
If money is stolen on your credit card you just dispute it with your credit card company and they’ll resolve it by removing the transaction from your account. Then they’ll investigate the matter further.
Secondly, there beneficial to businesses. If you rent a car or book a hotel they’ll likely ask for your credit card details for security and damages. This just adds an extra level of security for the business because some people don’t keep enough money In their debit cards.
Thirdly, you’re spending the credit companies money first, and not your own. This lets you use your money longer, earning interest, investing it elsewhere or just by adding a little bit of a buffer for security.
7. Keeping Vendors Honest
Say you hire a tradesperson to renovate your bathroom. They come in and spend the day pulling things out, measuring, cutting, putting tiles into place and leave it to set, the work comes in at about $5,000. You pay them with the money in your savings account and all is well.
But 24 hours later you check on your new bathroom and the tiles have shifted, the grouting hasn’t set and there’s water leaking everywhere. The bathroom you paid for now looks like a Picasso painting! The contractor still has your money and it takes time for these sorts of claims to be resolved.
If you paid with your credit card, however, the card company has processes in place to deal with fraud. That’s great for you because they’ll withhold the funds from the contractor until the matter is resolved. Not only will you get your money back, but you’ll be referred to a trusted contractor to finish the job!
YOU SHOULDN’T USE A CREDIT CARD IF
As much as there are a lot of great uses for credit cards, I must stipulate some warnings. If you find yourself relating to the following, maybe a credit card might not be a good fit for you yet.
- You have trouble paying your credit card balance on time.
If you think that’ll happen to you, get a low-interest credit card with a low monthly limit. Or just use a debit card (cash) to avoid racking up interest. - You tend to spend more than you can afford.
By paying with debit, it limits you to spending money you’ve already earned. Giving you a realistic perspective of working for things you want/need. - You have a hard time staying under your monthly limit.
Exceeding your credit limit results in costly fees, and in doing so can also put a dent in your credit score. - You only have expenses that don’t fit in the card criteria. Certain expenses such as student loans, taxes and mortgage payments have to be made by cash or bank transfer. If you pay by credit card you’ll be charged a fee of around 2.5%, a waste of money in most cases. Just get the right credit card for your circumstances.
Types of credit cards
No annual fee
This type of credit card costs nothing to own up front, perfect for beginners looking to build up their credit score. It just sits in your wallet without costing you a thing. However, the only drawback is they typically charge higher than lower-rate credit cards. This is not a problem just as long as you pay back the balance in full every month.
Low rate
A low rate card is a credit card with a low or sometimes 0% monthly interest rate. These cards do charge an annual fee ($50 approx) in exchange for the low rate but that’s worth it when you need help getting rid of debt!
Rewards
Rewards and benefits are probably the greatest uses for a credit card, they offer so much in bonuses for meeting spending requirements like cash back, points and travel. They’re perfect if you spend a lot on expenses like if you have a business or if you travel a lot for work. They do charge a higher annual fee that justifies these perks but are incredible tools when used right.
How much does a credit card cost?
It depends on the type of card you get. Say if you only need a card to build your credit score, you can easily obtain a card that’s totally free to use and it won’t cost you a thing.
Just keep in mind though that credit card companies earn their revenue from people not paying their cards off and just being lazy in general.
In other words, always keep an eye on your account and you’ll be fine!
Cards charge the following fees…
- Annual fees
- Interest rates
- Late payments fees
- Cash withdrawals
- Expenses that don’t fit in the criteria of the card
Do’s and Dont’s with a credit card
Do
- Make sure you make regular repayments to your credit card
- Credit is not free money. Treat it like it’s your own cash
- Educate yourself, make sure you’re getting the right card for you
Don’t
- Use it on items you don’t need
- Forget to pay it off
- Get the wrong card for your lifestyle
How to apply for a credit card
Applying for a credit card is pretty straight forward. You’ll be asked about your eligibility to see if you qualify and you’ll need to provide some necessary documents.
Eligibility
- Income. You will need above a certain amount before you can apply. Minimum income cards generally need you to earn above $15k/year.
- Above 18 years of age
- A resident of the country your applying in
Necessary Documents
- A good financial history
- Photo ID and proof of citizenship (passport)
- Proof of income by Providing payslips/ tax return
- Monthly expenses. Rent and bills
- Any assets or liabilities from other accounts
- Employer information
- Personal information. Email, home address, mobile, etc
- Referal person. Someone you’ve known for a while
CONCLUSION
So there we have it, these are some of the features of credit cards and Iv listed everything I know about these great little things.
As long as you are responsible with them, keep learning how to use them, don’t spend them on things you can’t afford and you’ll be a step ahead of people who don’t use them.
Yours truly,
Kristian
