Are you thinking about getting a credit card for the first time? Wondering what the main benefits of credit card ownership are?
While using a credit card irresponsibly can lead to consequences, owning a credit card can actually be a very good thing. There are a variety of reasons to get a credit card and getting one can be a lot more helpful than you might expect.
In this guide, we’ll list the 9 major benefits of credit card ownership that you should know about.
1. Have More Payment Flexibility
One of the best benefits of using a credit card is that it allows you to defer payments and pay off the balance of your credit card at a later date. This can be very useful if you don’t have the cash on hand to make a necessary purchase.
Credit cards typically offer a grace period in which you won’t have to pay interest on any purchases you make. As long as you pay off the balance in time and are responsible with your credit card, you can successfully make a purchase and pay the balance off without needing to pay any interest.
If you’re waiting for your paycheck, for example, having a credit card can be very convenient and can allow you to make an important purchase a little bit sooner than you otherwise would be able to.
2. Improve Your Credit Score
Another great reason to own a credit card is that it will allow you to build your credit history and improve your credit score. As long as you use it responsibly, you’ll be able to start building your credit history. Your credit card activity will be reported to the major credit bureaus that determine credit scores and your score may increase over time.
Credit scores are very important and can help determine whether you’ll be able to get approved for loans and can also affect other major things such as utility bills as well. Building your credit history and raising your score can help in a variety of situations such as when getting personal loans or getting a mortgage.
Because of this, it can be well worth it to get a credit card and start using it to raise your score.
3. Consolidate Debt
One of the benefits of getting a credit card is that you can use it to consolidate your current debts.
With balance transfer features, you can move debt from one credit card onto another one. You can also move other debts to a credit card balance as well. If your new card’s interest rate is lower than your loan or previous card’s interest rate, then this can be very beneficial.
Making a balance transfer can allow you to consolidate debt and will help make it more convenient to pay off. It can also save you a lot of money if you transfer your debt to a card with a lower interest rate.
4. Track Your Spending
Another great aspect of owning a credit card is that it can allow you to track your spending more easily when compared to using other payment methods.
When you have a credit card, you’ll receive a statement every month that shows your spending. Most cards allow you to check your spending in an online account as well.
Additionally, many credit cards will also show a summary of your yearly spending on a year-end statement. This will give you a clear idea of your spending and can be helpful for tax purposes as well.
By using your credit card to make purchases, you’ll be able to clearly track what you’ve been spending each month and can tweak your budget accordingly.
5. Receive Credit Card Rewards
Another perk of getting a credit card is that you’ll be able to get access to credit card rewards.
Credit card rewards programs can allow you to get a variety of bonuses such as frequent flyer miles and points that you can redeem for cash or gift cards. Many cards also offer cashback bonuses which allow you to get money back spent on certain types of services or at certain places.
On top of this, many credit card companies offer sign-up bonuses as well. These bonuses can allow you to get extra points or cashback. Many of these offer $500 or more when you open a card and spend a certain amount within the first few months.
All of these bonuses and perks can be pretty useful. They can help you save a lot of money on purchases when compared to using cash or a debit card.
If you want to find a great credit card to apply for, be sure to learn more about the top credit cards now.
6. Benefit From Fraud Protection
Another perk of using a credit card is that you’ll get credit card fraud protection. Based on federal law, your credit card balance will be protected and you’ll only be liable for fraudulent purchases that are made up to $50.
As long as you report fraudulent credit card charges in a timely manner, you’ll be protected and won’t have to pay for any purchases that were made after your card was stolen. Credit card charges aren’t withdrawn instantly, so fraud will be easy to stop once it has been noticed.
The extra fraud protection you get from a credit card is pretty significant, so it’s well worth keeping this in mind when deciding whether you should get a credit card or not.
7. Protect Purchases in Other Ways
In addition to fraud protection, there are also other types of protection that credit cards often offer as well.
Price protection benefits, for example, can allow you to get refunded if you bought something and the price changed later on. You may be able to get compensated for the difference in the price you bought something for and the lower price that was offered later on.
Purchase protection may also be available and can help if an item that you’ve purchased gets lost or stolen after purchasing. Return protection, on the other hand, can allow you to refund or return an item after making a purchase, even if the store you bought it from won’t take it back.
While not all credit card companies offer all of these benefits, many of them do. Be sure to find out exactly what types of protection each credit card you’re considering offers.
8. Get Extended Warranty Coverage
In addition to the other types of protection that many credit cards provide, credit cards may also offer extended warranty coverage for purchases as well. With an extended warranty, you may be able to get a reimbursement, a repair, or a replacement if a product breaks down after the manufacturer’s warranty expires.
Keep in mind that if a card offers extended warranty coverage on purchases, there will be limitations to it, so you’ll need to find out what the specifics are. However, in some cases, this coverage can be very helpful and can make being a cardholder well worth it.
9. Experience Travel Perks and Benefits
If you want to save money the next time you’re traveling or on vacation, then having a credit card can be a big help. Many cards offer useful features and benefits that can allow you to save money and have more peace of mind when traveling.
Credit card benefits for travel might include trip cancellation and interruption insurance, baggage delay and trip delay reimbursements, and free airport lounge access. Benefits may also include collision damage protection for rental cars.
Certain cards will also offer rewards that can help you save a lot of money when planning your next trip. Airline rewards credit cards, for example, may allow you to get free checked bags or may allow you to get travel miles when you use your card.
If getting any of these perks while traveling is important to you, be sure that you look for a credit card that offers some of the best benefits for travelers.
Understanding the Major Benefits of Credit Card Ownership
If you want to fully experience the benefits of credit card ownership, be sure that you consider credit card options carefully. Not every card is the same, so you’ll want to do your due diligence to find one that offers the rewards and benefits that are most important to you.
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