With the average US household having almost 7,000 dollars of credit card debt, it’s easy to vilify credit cards themselves. However, you need to keep all of the amazing benefits and positives of credit cards in mind before you write them off as inherently bad.
Let’s look at 8 reasons why credit cards are good and learn why having a credit card is a necessity.
1. Gives You a Solution in Case of Emergency
Your car breaks down. Your kid breaks their arm. You have to take a week off work to move to a new apartment. You underestimated how much you owe the IRS. Your dog needs an emergency vet visit.
Life throws unexpected emergencies and expenses at us always. It’s a matter of when, not if, these things will happen.
So what do you do in these situations if you have little to no savings to cover them? Over 55 million Americans have no money put aside for emergencies. Even if you do have some savings, sometimes it’s not enough to cover what you need.
That’s where credit cards come in. Simply charge the expense on your credit card to give you the money you need and time to pay it off. You could consider getting a loan to cover emergency expenses, but many credit cards have lower interest rates than quick loans.
2. Build Your Credit History
Building credit means you’re showcasing that you’re able to responsible financially. While you can build credit in a number of ways, one of the best ways to build a great credit score is to get a credit card and make consistent and reliable payments.
Building a good credit score impacts your life in many ways: it impacts your ability to get loans, open new credit cards, lease apartments, buy a home, etc.
If you have bad credit and want to use a credit card to improve your score, there are cards designed especially for you. Start by charging small things to your card and paying the bill off in full every month. The credit card will report your payment history to credit bureaus, which will boost your credit score!
3. Earn Points and Rewards
Many credit cards offer points, rewards, and even cash back for using the card. If you want general cash back, look for cards that give you a percentage for every dollar you spend.
You can also find specialty cards that give extra points for certain purchases like groceries, gas, travel, and more. Depending on the card, you could receive discounts, flier mile points, gift cards, and more.
4. Better Theft Protection Than Debit Cards
If your credit card is stolen, lost, or hacked into and used fraudulently, you’ll only be responsible for the first 50 dollars of unauthorized spending. After that first 50, the credit card company takes responsibility and will hold an investigation on the other charges.
This is only true for debit cards if you notify the bank within 2 days of the charges. If you fail to do that or you don’t realize, you could be responsible for hundreds of dollars that you didn’t even spend yourself.
5. Keep Track of Spending
Credit cards have a reputation for easy and unbridled spending. And if you aren’t a smart spender or you’re too tempted to charge everything, then this is true.
However, credit cards are also great for their budgeting and tracking benefits if you use them properly. The credit card company keeps a detailed history of your spending, so you can keep direct track of every penny you spend. This can help you analyze your spending habits, follow a budget, and more.
You can also get “secured credit cards” that have pre-set spending limits based on deposits you give when you sign up. They’re also great options for people without much money or with bad credit who still want to build a good credit score.
6. Merchant Protection
Imagine this: you pay a plumber in advance to fix your toilet. They never come. Or they do come, but they don’t finish the job or do the job incorrectly.
If you paid them in cash or with a debit card, you’re basically out of luck. You could report them, sue them, or launch an investigation, but this takes even more money and time away from you.
When you pay with a credit card, you can call your credit card company and dispute a charge if it wasn’t completed or done correctly. They will then launch an investigation themselves, and you’ll often get your money back.
7. Signup Bonuses
Similar to the rewards and points we mentioned earlier, many credit cards offer signup rewards and bonuses when you open a new credit card. You could get a free 50 to 500 dollars just for signing up for a certain card!
Combine that with the rewards and other benefits of credit cards and you can effectively save and earn money just through using a credit card.
Above all else, credit cards are convenient.
They allow you to charge large purchases without having to carry around a duffel bag of cash (imagine paying for your new TV in all cash!). They are also great for travel, often offering better exchange rates than you’d get with cash.
They’re also convenient for online purchases, recurring billing, and offer better protection than other payment methods. You can sometimes even get discounts or reduced interest on bills like student loans or other installment loan payments when you sign up for recurring billing with a credit card.
Final Thoughts on Why Credit Cards Are Good
Now that you know the answer to “why credit cards are good?”, it’s time to actually sign up for one.
And don’t hesitate to reach out and contact us if you want some more advice!
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