A credit card is a plastic payment card issued to bank users to use instead of a Paper Check system. They can withdraw their amount through ATM machines and can pay through credit cards.
There are good reasons why personal finance experts spend so much energy trying to avoid using credit cards. Many of us use credit cards irresponsibly, ending up in debt. Contrary to popular belief.
However, if you can use plastic in charge, it’s actually best to pay by credit card instead of a debit card to keep cash transactions to a minimum.
Let us look at why credit cards you trust stand out from the crowd, as well as the use and strategies of some credit cards.
Responsible Card Uses
1. Unique Bonus
When it comes to getting a new credit card, there is nothing worth mentioning more than the initial bonus opportunity. Applicants with good or good credit can generally get credit card approval to offer bonuses (sometimes more) worth $150 or more in exchange for spending a certain amount ($100 to several thousand dollars) in the first few months of opening an account.
Other cards attract applicants for points or miles, which can be used for travel, gift cards, merchandise, and account points. In contrast, standard debit cards with bank checking accounts typically do not offer upfront bonuses or the opportunity to continue receiving bonuses.
Cashback credit cards were originally promoted in the U.S. through discovery, and the idea was simple: use the card and get a 1% refund in the form of a purchase refund.
Today, the concept has grown and matured. Some cards now offer 2%, 3% refunds or even up to 6% on selected purchases, although this lucrative offer implies a quarterly or yearly spending limit.
Some cards, such as loyalty bonuses, offer a high rate of refund bonuses of 2% of all purchases, but you must deposit cash directly into your loyalty investment account.
Most credit cards automatically come with consumer protections that people don’t even realize they have, such as car rental insurance (although usually their personal car insurance), travel insurance, and product warranties that may exceed the manufacturer’s warranty.
Some purchases with a debit card are difficult. When you want to rent a car or stay in a hotel room, you will almost certainly have an easier time if you have a credit card. Car rental companies and hotels expect customers to pay by credit card, as this will make it easier for customers to charge for any damage to their room or car.
Another reason is that the trader does not know the final amount of his transaction unless they have already paid the rent or hotel stay. Merchants must therefore freeze a certain amount of available credit to protect themselves from potential costs they do not expect.
Therefore, if you want to pay one of these charges by debit card, the company may insist on depositing several hundred dollars into your account.
5. Building Credit
If you have credit or try to improve your credit score, using your credit card responsibly is useful because the credit card company will report your payment activity to the Credit Bureau.
However, using a debit card does not show up at any point in your credit report, so it cannot help you build or improve your credit. Even if you need to deposit some funds to get an insured credit card, this can help you build your credit history and end up eligible for a guaranteed UN card or larger loan.
6. Bonus Points
Establishing a credit card allows cardholders to earn one or more cents per dollar. Many credit cards offer bonus points for certain shopping categories such as restaurants, groceries, or gasoline.
Once the specific income threshold is reached, points can be redemption as travel points, retail and restaurant gift cards, or product points through the credit card company’s online rewards portal.
The trick is to find cards that best suit your spending patterns. The opposite – changing your spending patterns to fit a particular card – can be counter-productive. However, if you spend money regularly with a retailer or desire a hotel, why not use cards to encourage your ongoing sponsorship by offering bonuses, discounts, and enhanced benefits?
Reasons not to use Credit Card
There are other reasons why paying credit for them is not better with you and your spending habits. Yes;
- You cannot pay your credit card balance in full and on time: If that happens, use a debit card (or cash) to prevent credit card debts from entering and incur interest costs.
- You tend to spend more than you can afford; paying by debt limits the amount of money you can spend that you have already earned.
- You can only get a credit card with a low credit limit, and it is hard to maintain your balance: too much of your credit can lead to costly fees, which can also reduce your credit score.