Let’s all express a modicum of gratitude.
- Some people will tell you that credit cards are bad news.
- There are many benefits to using credit cards that consumers can take advantage of.
- Credit card users can earn money, save on travel expenses and benefit from fraud protection.
Credit card are probably one of the most controversial financial products. Some experts will tell you that credit cards are pure evil and should be avoided at all costs. And then there are people who make a living offering credit card hacks to save money.
The reality is that credit cards have their drawbacks. If you end up having to carry a balance on yours, it could lead to costly interest. And it could hurt your credit score. Additionally, credit cards can lead to overspending, although setting your own personal spending budget each month and tracking your expenses can help you avoid debt.
But while credit cards aren’t perfect, they have a number of features that consumers should really be grateful for. Here are four we should all appreciate.
1. Cash back and other rewards
Many credit cards offer cash back or other types of rewards on daily purchases. So basically you’re effectively getting paid to buy the things you need to function, like gas for your car and food for your refrigerator.
2. Savings on travel
Certain credit cards, namely, travel reward cards — provide economic benefits to frequent flyers. Many of these cards allow you to check one bag for free, instead of having to pay around $35 for the privilege. And since airlines no longer offer free meals on domestic flights, your credit card can get you a discount on food and beverage purchases while you’re in the air.
3. Built-in fraud protection
Many credit card companies have sophisticated algorithms in place to detect fraudulent activity on your account. If you live in Montana and someone starts using your credit card to buy gas and groceries in Nevada, this might raise red flags. Likewise, if you’re not normally close to reaching your credit card limit and suddenly there’s a large purchase that puts you at the end of that limit, that might be enough to trigger an alert at fraud – and catch a criminal in their tracks.
4. The ability to build credit
Regular use of a credit card can help you build credit if you don’t have a great history or improve your existing credit score. An important factor that goes into your credit score is your payment history. If you pay your credit card balance on time and in full each month, this is activity that will be recorded by the credit bureaus who use this data to calculate your score.
Another factor that goes into your credit score is the length of your credit history. Keeping a credit card account open and in good standing for many years can lead to a higher credit score and more borrowing opportunities.
Credit cards are truly a financial tool to be grateful for. And these advantages especially justify their use.
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