Credit card debt in the US totals just under $800 million among 176 million cardholders. Credit cards are painted as the bane of financial security and the ruin of your credit score. However, like most fairy tale villains, credit cards are not all bad. When used responsibly over time, credit cards can be a benefit, give you peace of mind, and help you get a good interest rate on a car loan or home mortgage in the future. Responsibly means paying your balance in full to avoid high interest charges or working toward paying down the debt if you already owe more than you can pay now. Here are five reasons to get a credit card.
1. To Build Your Credit Score: Responsible use of a credit card helps develop a good credit history, proving that you are reliable and able to pay bills on time. The FICO score scale ranges from 300 to 850, with most people scoring between 600 and 800. The best interest rates on mortgages and loans are offered to those with scores of 720 and above.
2. For Traveling Abroad: Credit cards offer lower foreign currency exchange fees than just trading cash. It’s safer than carrying cash, and you won’t be stuck with the foreign change. Check your credit card’s terms for other fees; what would it cost to withdraw money from an overseas ATM? Do consider which credit cards you bring, though; VISA and MasterCard are the most commonly accepted networks, but Discover Card is rarely accepted outside the US. Most European countries use credit cards with embedded microchips that are much more secure than magnetic stripe American cards, so merchants may ask to see your passport or other ID to use them. American companies help customers avoid fraud by suspending your card if it is used out of the country, so be sure to notify the credit card company of your plans to avoid the hassle of a suspended card during your relaxing getaway. Before you go, make sure you have the phone number for your card issuer that works internationally in case you do encounter problems.
3. For Security: The security of carrying plastic instead of cash is clear, but credit cards also provide more protection than debit. A debit card takes the amount charged out of your bank account immediately; with credit, you have the opportunity to review your statement in time to take action.
4. To Get Credit Card Rewards: Getting rewards like free airline miles and cash back can feel like getting an early birthday present. The caveat lies in controlling spending; buying just to earn rewards is a financial self-sabotage. However, if you use your credit card for regular costs like gas or groceries that you would have bought anyway and pay your balance in full each month, earning rewards is like getting something for nothing. Who wouldn’t want that?
5. For Making Reservations: Many hotels and car rental companies won’t take a reservation on a debit card. If they do, they place a hold on the full amount, reducing your available balance long before the date you use the service.
The old saying about responsibility holds true for credit cards too. Credit cards give you the power to avoid exchange fees, build credit and earn rewards, but with great power come great responsibility.
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Another reason to use a credit card, providing it’s used responsibly, is the added consumer protections now built in to most, if not all, credit cards. This especially makes sense if you shop online. People like to demonize credit cards, but it’s irresponsibility that causes credit card debt, not the fact that credit is available.
Wonderful steps and guidelines for obtaining and keeping credit cards. I wish I would have been given these tips when I was younger. When I was younger and married to my first husband he went credit card happy. Obtaining every credit card he could. I was to blame also, I was flashing the plastic as well. Having these guidelines would have saved me for the credit problems I faced years later. After years of struggles I was able to erase my credit card debt. Except for a check/debit card I have not own a credit card for years. I’m thinking I should reconsider after reading this information.
One of these, the cash back rewards, is offered by several debit cards. But the rest of them are pretty good reasons to have at least a secured credit card. A good credit rating is important for many things, from getting a job to an apartment and using credit intelligently can help you get a good score.
So basically, overall convenience is the driving factor in why you think we SHOULD all have credit cards. I understand having a credit history is important. I just hate the fact that you need to have a credit card in order to have a FICO score in the first place. I’m a little anti credit card because it’s so easy to spend beyond your means when you pay for everything with plastic. You get comfortable with that convenience, and it can end up biting you in the rear end if you aren’t careful.
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These reasons are definitely true. I just realized now what are the things that really convinced me before to get a credit. I just love the security that credit card could offer to me. I will no longer bring cash.
With greater power indeed comes greater responsibility as well. For me, the number one reason to get a credit card was that it’s just very convenient, it’s easy and fast to pay with it. I’m so used to it now. I always keep an eye on my balance, I don’t spend what I don’t have, that’s my number one rule.
This article is a wonderful way to look at credit cards. I must admit that I was skeptical about having a credit card for a while. I didn’t want to have the build up of debt at that starts at a young age. I actually chose to get my first credit card when I wasn’t at a materialistic age, but you also have to be careful here as well. You want to make sure that, as this article states, you are using the credit card as a tool to build credit and not to work against you. I also like what the article says about keeping it on you as opposed to cash on hand, which is easily spent when you are going about your day.
For me who travel most of the time, having a credit card is very helpful. I can book flights and hotel reservations in the convenience of my home office. But we should also put in mind that responsible spending is way important.
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Building an untarnished credit history is of utmost importance to me so I make it a point to settle my credit card bills on time and sufficiently. My ultimate goal is to be debt-free but the convenience of having a credit card is too hard to resist. Thanks!
The convenience of having a credit card when you need something urgently tops my own list but I’m not exactly a fan of the entire concept. The most difficult part of having the independence to purchase what you need and want is the possibility of not spending within your means. Thanks for the share.
It is most definitely worth investing in a credit card! Great tips and reasons explaining why it is so worth getting one. Thank you for sharing, looking forward to reading your other posts.
Thank you for sharing these tips, I agree that it is worth investing in a credit card because if you need something urgently you can purchase it. However, you may get a bit too over excited and start to spend a lot on your card, because of the independence you are given with it.
These tips are brilliant. I think getting a credit card would be practical, because it allows you to spend money straight away and you can shop online. However, at the same I think you need to be careful, especially if you younger, because you may be irresponsible and start to use your card a bit too often.
These tips are great and I could not agree more with them. Credit cards, are great for people who have a lot of spending money and they travel abroad often, because it would make their life easier. There are some negatives though as, some people may start to lose control and spend too much money and even go into their overdraft.
Some great advice here, I have not yet got a credit card and this post is definitely making me question this! I have many friends that use their credit cards far too much and are irresponsible with it so that has put me off, but I think I will visit my local bank and invest in one! Thank you for sharing .
I’ve never had a credit card before. I had one for Best Buy but that was it. Luckily my credit score is still building from paying off my student loans. I may get a credit card after my loans are paid off. Who knows what will happen when I have a credit card in hand, I may be buying shoes from all over the place lol.
Thanks for a good read. I learned something from it.
Melanie
http://www.melanielegaspi.com
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As long as you have a stable source of income and you are disciplined enough to spend wisely and only within you means, applying for a credit card is a good idea. Thanks for the enlightening share.
Thank you for sharing this post. I think getting a credit card is very important and everyone should get one, it makes life so much easier and you get some beneficial rewards as well. Obviously you have to be careful because once you start using your card you may find it hard to stop and overspend.
I have recently gained a credit card and I have to say getting one was a great idea, it makes purchases so much easier and is always there on hand just in case you need it! Great post- thank you for sharing this post.
I wish I could like professionaltightwad’s comment. The extended warranty offered by most (if not all) American Express cards is a HUGE benefit. The security of knowing that payment made for goods or services that are never delivered can be disputed is even bigger. A rental car payment (~$150) was triple-charged on my credit card, and when I confronted the vendor they told me there was nothing they could do to refund me. If that had been on a debit card, that would have been money removed directly from my account. With a credit card, it took 5 minutes to dispute the duplicates, and I never had to worry about them again.
Hello,
very wonderful guidelines for obtaining credit cards. Now credit cards is really important in case of emergency. The 5 things which you shared will really help me while handling credit card. Good Post.
Credit card is always the best. I have recently gained a credit card and I have to say getting one was a great idea, it makes purchases so much easier and is always there on hand just in case you need it! I make use of discover cards
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Great post! It is definitely important to have a credit card if you are interested in raising your credit score. You need show you can use credit responsibly and have a credit card and paying it off each month is one of the best ways to do this. Security is also a great reason. Credit card companies will reimburse you if your credit card is stolen and used by someone else, with cash you are just out of luck.