There are many advantages of credit cards. Sure, credit cards are, in many ways, a luxury, a way to buy things that we cannot yet afford. But while improper use of credit cards can cause problems, when used responsibly credit cards are a very important part of your financial health. In fact, following are six ways that credit cards help you improve your finances:
When you use credit cards responsibly you build your credit and create a higher credit score. When you have a higher credit score you get access to the best interest rates on major purchases such as a home, car or boat. Read LINK TO ARTICLE for tips on building your credit.
Your credit score, which is determined in large part by your use of credit cards, also plays a major role in the rates that you are charged for auto insurance and life insurance. Esurance, Nationwide and many other car insurance companies readily admit that this is true. So a good credit score saves you money in many ways.
We all know that medical care is expensive. However, if you have large medical bills often you can receive a huge discount by paying those bills off, in full. It is sometimes financially advantageous to charge your medical bills and take advantage of this discount, even if you have to pay some interest on the credit card balance. In addition, you can use credit cards to pay for medical treatment, including preventative procedures, that you might not be able to afford but that are necessary to ensure your good health. What could be more important than that?!
Many credit cards offer a variety of benefits on major purchases, such as extending warranties. For example, if you buy a smart phone using a credit card and that phone breaks one week after the manufacturer’s warranty expired you may still be able to get it replaced, for free, if you used a credit card to purchase it that provides warranty extensions.
Credit card airline miles are one way to use credit cards, but there are advantages of credit cards on vacations, too. First, they let you pay for things without carrying large sums of cash. Second, they often let you earn points on your travel purchases, including airline tickets. Third, they may provide free travel insurance, car rental insurance and more.
There are advantages of credit cards beyond simple credit card 0 APR. In fact, through careful use of a credit card you can actually make money. You can do this by purchasing things that you were going to buy anyway using a credit card, letting your money sit in the bank and earn interest while the credit card company pays the bill, then pay off the charge before any interest accrues. U.S. News and World Report also suggests you can make money with careful use of sign-up bonuses, cash back rewards (again, when you spend what you would have spent anyway – pay your bills with your credit cards and rack up those rewards!), and transferring balances from high interest accounts using zero APR offers.
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