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Finance

10 Reasons Why You Need a Credit Card

10 Reasons Why You Need a Credit Card 1

Many finance experts constantly give us the impression that owning a credit card could be one big financial mistake we could make.

Their opinion is not completely false. There are so many ways we can misuse our credit cards, and it can cause us some serious financial setbacks. A badly used credit card could leave someone in a financial debt pool.

Several people still don’t know the difference between a credit card and a debit card. CreditNinja explains credit and debit cards. Read below to understand the differences between the both.

Regardless of what you think or know about credit cards, the truth is, you need one. This article contains ten compelling reasons why you need a credit card.

1.Boosts your Credit Score and History: Your credit history and score provide a detailed analysis of your finance management. Using a credit card improves your credit score and credit history for future financial involvements. When you use a credit card and consistently maintain a good credit history, it impacts your creditworthiness, and you get to pay less for several things with a better credit score. For instance, if you are a homeowner who just purchased it, your credit score will impact your mortgage charges. If you have a high credit score, your monthly mortgage payment will be relatively low compared to a person with a low credit score. Credit score plays a crucial role in your loan application as well. Both private and public institutions or loan providers easily give loans to those with high credit scores. Your credit score affects your eligibility for a loan. It can also affect your employability chances. Many employers now look into the credit history of their employees. Therefore, owning a credit card and properly managing it clears a lot of financial paths for you.

2.Provides Emergency Funding Option: It’s one of the main reasons why most people use their credit cards. It enables you to access quick money regardless of any financial need you might be experiencing. Although it’s advised not to mishandle your credit card by using it to fund your every need, it still serves a unique purpose, especially in emergency cases. Your credit card should serve as your emergency financial backup. 

3.Secured Online Purchases: Many financial experts advise that it’s better to use your credit card during online purchases. The idea is that your credit card is more secure than a debit card. Today, many online purchases require your credit card details for secured financial transactions. So, you only use a credit card to make online payments. 

4.Cash Back Rewards: When you consistently pay for your credit card on time, you get a lot of financial rewards. These rewards come in the form of cashback. While getting a credit card, try to get the ones that provide you with such points when you use them. These rewards can be used as free money, travel points, and discounts. Also, you can get sign-up cash bonuses; it’s another area your credit card outshines a debit card. When managed properly, it comes with attractive financial benefits.

5.Purchase History and Expense Tracker:  At the end of every month, your credit card details every single purchase you have made with it; it’s a financial health approach, especially for those who like to budget their monthly expenses. With your monthly purchasing history, you can see the things you mostly spend money on, and it helps you make better and wise choices on how to manage your finances.

6.No Fear of Losing the Card: Your credit card is always secured wherever you go. If you lose your credit card or it gets stolen, all you have to do is immediately report it, and you will get another one. You might get charged a fee of up to $50, but mostly, you will get a waiver.

7.Purchase Protection: An important and interesting thing to note about your credit card is that all the purchases you make with it are protected purchases. In case if you don’t get the items you purchased online. You do not have to go through the stress of persuading the vendor to refund your money. All you have to do is report to your credit card company; they will, in turn, investigate your claims and help you get your refund if they find it in your favor.

8.Provides Traveling Convenience: Traveling with your credit card provides you with convenient ways to make financial transactions. With your credit card, you can pay for your traveling expenses without having to carry huge amounts. You can easily access better foreign exchange with your credit card, although there might be attached charges for it. Still, the benefits of using a credit card while traveling outweigh its costs. 

9.Credit Card Insurance: Many credit cards come with credit card insurance that covers most of your purchases. When you purchase an item with a credit card, and it gets stolen or lost, your credit card company will cover the cost of the loss of that item, a privilege you don’t get when you pay in cash or use your debit card. To verify if your credit card offers this insurance option, go through the terms of your credit card agreement or contact the company to find out more about this. 

10.Payment Grace Periods: Before your credit card starts charging you interest on any purchase, it provides you with a 30-day grace period. During this period, you are charged zero interest. You must use the grace period wisely as it impacts your credit scores. 

Conclusion

A credit card is an excellent financial tool. When used wisely, it provides you with many benefits and comforts. It’s advisable that you get one but before that, make sure you are ready to make wise and healthy financial decisions.

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