8 Ways Credit Cards Can Help You

Wherever you go, you will hear that credit cards are poison. This is not 100 percent true. Like a vaccine, where the poison is used to help the body fight a certain health problem more effectively, you could use your credit card to help you manage your money better.

1. Bonuses and rewards. Most credit card providers show their appreciation to a good customer (read that as the person who pays his/her bills on time) by offering reward points and bonuses that are redeemed as cash or gifts. You can save anything from $50 to $250 with such offers making it worthwhile to use the credit card.

2. Cash back policy. Many credit card providers offer cash-back when you use your card regularly (and make timely payments). The cash back could earn you anything from 1-5 percent, which can amount to a small fortune over time.

3. Interest-free installments. Purchases through credit cards often allow for (three to eight) interest free installments that help make large purchases have less of a burden on your monthly budgets.

4. Safety with money. If your debit card is stolen and misused, it will be a long time before the money that disappeared from your bank account is returned. This can mean bounced checks, late payments and with it- embarrassment. With credit cards, all you have to do is inform the company that your card has been used fraudulently and they will swing into action blocking any further use of the card. You are not liable for such fraudulent purchases. The key is to keep track of your card and the activities on it so that both you and the company are aware immediately if the card is stolen or misused.

5. Automatic insurance. Most of the credit cards come with some form of insurance as an additional benefit to the consumer. Ensure that you are aware of what insurance covers you and what the terms are. Besides the credit card theft, you could be insured against loss of luggage while travelling, car rental insurance, travel insurance and so on. Some credit cards also offer warranty on the major purchases you make.

6. Universal acceptance. Credit cards open doors. Sometimes, it is necessary to have a credit card for identity purposes –i.e. PayPal – or if you need it against any incidentals – in hotels – where debit cards are not always recognized or accepted. This is especially true when you travel abroad where some merchants decline a debit card, but accept credit cards.

7. Build your credit score. Used wisely credit cards can be an extremely potent tool for building your credit score. This is why it is important not only to have 1-3 credit cards (it amounts to your total credit), but also that you use it wisely, i.e. ensure to pay your bills on time. This is the way to prove financial responsibility in order to help your credit rating rise.

8. Gives you freedom to make best use of any opportunity. Say you find this superb bargain on something you have wished to buy for ages. However, you do not have cash on you or in the bank. If you know that u will have the money by next month; however, by that time this bargain would not be available; here is where you credit card would come in handy.

Caveat: Never use your credit unless you can pay the bill in full when presented. If you do, you may be trapped into paying huge amounts of money as compound interest, which can drain your resources.

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