Credit cards are a commonly used payment method these days. We can pay for almost anything using plastic money. When used prudently, credit cards can help you build credit and finance a variety of purchases and payments even when you don’t have enough money on hand.
What is a Credit Card?
A credit card is a convenient financial tool that is used to make payments and purchases without involving cash. When you apply for a credit card, you are provided with a particular credit limit to make payments and purchases and you promise to repay the money you owe at the end of the month. You may also need to pay an agreed interest rate with the amount used if you are unable to pay the balance in full before the due date.
What are the financial benefits of a credit card?
A credit card is a great way to finance day-to-day purchases but you should use them cautiously to streamline your personal finances instead of building debt. There are so many benefits of using credit cards and some of them are listed below.
Convenience
A credit card allows you to buy anything you want without worrying about how much money you have. You can make payment for a product, service or anything else and pay off the balance at the end of the month. This also eliminates the need of carrying cash with you when you visit a local market either to buy groceries or to make big-ticket purchases like expensive home appliances. However, you should swipe your card only for what you can afford and pay off easily in near future.
Spread out the costs
Sometimes we don’t have enough money to buy something due to a huge price tag. Thanks to credit cards, consumers are allowed to pay for purchases in several months as installments. This means you can buy anything you want and make the payment in equal monthly installments. This helps streamline personal finances and support big-ticket purchases without incurring interest. Some cards also come with ‘buy now, pay later’ features so consumers can have favorite stuff without waiting for months or borrowing money from somewhere else.
0% introductory APR
If you have a best credit card with benefits like balance transfer, you can go interest-free whenever you transfer a balance of another card with a high-interest rate. Some cards allow users to transfer balances of their older cards to the new card for debt consolidation purposes. Such cards come with a 0% introductory APR period so a user doesn’t have to pay the interest on the balance for a set period of time. This means a cardholder can easily repay his balances by making minimum monthly payments without paying a single penny for interest.
Purchase protection
Sometimes our ordered goods or products are damaged or lost. This can cause a huge financial loss. For instance, if you have ordered an expensive smartphone online and you found it damaged when delivered to you. This is where purchase protection offered by credit card companies comes into play. When you pay for a product using your credit card, you can claim your money back if there is an issue or problem with the product ordered. This helps you save your hard earned money in case your ordered product is damaged or lost.
Cashback and free rewards
Almost all credit card offers are promoted with enticing benefits and perks such as sign-up bonus, cashback, discount, free rewards, and more. This means you can save (even earn) money when spending on day-to-day essentials. To avail of such financial perks, you should go through the fine print and find out the ways you can save money with your credit card.
Boost your credit score
Credit cards not only help you finance daily purchases or payments like grocery or utility bills, but they also help you build and improve good credit. For this purpose, you should use your credit card below the given credit limit and pay down the balance in full every month. When you have a good credit score, you have better chances of getting a personal loan or mortgage application approved.
Summing up
As different credit card offers will suit individuals with different financial needs, you should get a credit card that fits your needs and requirements. You can compare credit cards to choose the best one with alluring perks and financial benefits. Make sure to use your card for stuff you can afford so you can reap real financial advantages of credit cards instead of building debt.
