Have you started asking the question: why use a credit card?
We’ve all heard of the stories of people who misuse credit and have mountains of debt. It shines a bad light on credit cards.
But that hasn’t stopped people from using them. There are more than 450 million cards in circulation that are being used.
So is the risk of a credit card worth it?
Keep reading to find the answer to your question.
So Why Use a Credit Card?
A credit card is often associated with debt.
But it doesn’t have to be. Nothing is stopping you from putting all your spending on it and paying it off every month.
There are some advantages to doing that too.
Build Your Credit Score
If you have any large purchases in the future, it can be hard to get financing if you haven’t built your credit score.
You need to be trusted for mortgages and auto loans, and your credit score is often how this happens. By getting a credit card now and keeping it paid off, you are building trust and helping your score go up.
Get Free Stuff
Have you looked at all the offers credit cards have?
You have travel points, cash back, physical rewards, gift cards, and a lot of other options. Every penny you spend on a rewards card gets you something in return.
Check out these options from HSBC to see what reward cards are available for you.
There is a lot of competition in the credit card market. One way that companies try to win your business is signup bonuses.
If you are approved and spend a certain amount of money in the first few months, you are usually offered a few hundred dollars as a reward.
If you don’t mind a small hit every few months to your credit, you can alternate signups to take advantage of several signup bonus programs.
When you buy with your debit card, that money is automatically taken from your account. Credit doesn’t have this problem.
Credit card companies are more inclined to tackle fraud faster because it was money that came from them. You haven’t paid for it yet.
The only thing you need to do is notify your credit card company, and they will handle any fraud for you.
Do you have some debt that has gotten out of hand?
Credit card balance transfers are an option for you. Find a credit card that has an introductory period with 0% APR and transfers your existing balance to that card.
This transfer avoids the interest from your previous loan or credit card. It can save a large amount of money in the long term and let you pay off the balance faster.
Use Your Credit Card As a Tool
By now you should have answered the question: why use a credit card?
Credit isn’t only a form of debt. If you are smart and manage your finances, you can use your credit card as a tool for rewards and safer spending.
Don’t skip out on credit because it has a bad rap.
Are you looking for more finance tips? Head over to our finance section for more guides that can help your financial life.