If you are in debt or have ever been in debt you probably have the mentality that credit cards are evil. Paying with plastic can get you in hot water at times but there are also a few instances when using your credit card can actually help you. Here are a few instances when you should use a credit card.
Establishing Credit
It can be nearly impossible to get a loan at a low interest rate unless you have established a good credit score. One of the best ways to establish good credit is to take out a credit card knowing that any purchases you make you will be able to pay off in full the following month. Bethy Hardeman, contributor for U.S.News, points out that credit cards are great for building credit if you use them responsibly.
Shop Safely
Most major credit cards offer zero liability, so it is safer to use a credit card when shopping to protect yourself from fraudulent charges and data breaches versus paying with a debit card. Deanna Templeton, contributor for credit.com, recommends that using a credit card for online purchases is the smartest way to go when shopping online. If someone gets your debit card number, your checking account can be drained quickly and it can take awhile to get your money back.
Enjoy Rewards
Depending on the credit card, there are a range of benefits that you could enjoy when you make purchases on your card. From airline miles to cash back incentives; there can be credit card rewards that credit card companies offer that can be ideal for everyone.
Rental Car Insurance
Next time you are on vacation and in need of a rental car skip on the car rental company’s insurance, which can be a costly fee per day, by paying with a credit card. Visa, Discover and American Express offer some type of rental car insurance on all cards. Always check with your credit card company first, but most do provide coverage of some sort if you use your credit card to rent a vehicle.
Useful For A Budget
This may seem odd considering using credit cards get so many people into trouble (and into debt too) but using a credit card can actually be a tool to budget. Making everyday purchases with credit can help you track that your monthly expenses are and help you budget for them in the future. Your credit card statement can also show you what spending you need to cut back on too.
Credit cards are not evil. Just remember to do your research to better understand credit cards and be smart when you use them. Sometimes credit cards can actually work for you.