Many people never discover all options that are available with the right credit cards and they consider them to be unnecessary in their daily lives. Managing credit cards requires a certain level of financial responsibility and attention to detail, which might seem too difficult for many people. Some think that they have a debit card, so they don’t need a credit card.
First of all, having a credit card is one of the first requirements for building and maintaining a credit score. Of course, it’s not enough to simply possess a credit card; you need to use it regularly. The bank will notify credit bureaus of your credit card activity which will gradually build you a credit score. Insufficient credit score can stop you from getting loans or mortgages approved so you might not be able to make big purchases that you want. Most of us simply aren’t fortunate enough afford to make the most important purchases, such as a new house, in cash. It’s hard to raise such big amounts in such a short time. That’s why we must rely on loans, which are unattainable without a decent credit score. You should avoid applying for different credit cards and cancelling old ones every couple of months, because having your accounts open longer positively affects your credit score. The first credit card you’re able to get might not offer you many rewards or benefits, but you should keep it open as long as possible nevertheless.
Credit card allows you to go over your current budget. Of course, this doesn’t mean that you should spend like there’s no tomorrow, but if you know your finances well you can make responsible purchases that will be repaid during your grace period in order to avoid paying interest. Use credit cards for moderate expenses, like gas, some piece of furniture or a kitchen appliance.
One of the major benefits of credit cards is that they’re universally acceptable. It’s not uncommon that you’re unable to book a hotel room or rent a car if you pay with cash or debit card. Paying with credit card is an additional guarantee that you’ll be able to cover for eventual damage you make. If you’re abroad, there’s a big chance that your debit card will be rejected on locations that will gladly accept a credit card.
Many benefits for travelers come with choosing the right credit card. Of course, you should base your choice on grace period and interest rates they offer, but award programs can help you choose between similar cards. If you fly often choose a card that offers you benefits tied with airline companies you normally use. You can get early boarding privileges or extra luggage for free, but the most useful are, of course, frequent flier miles. The exact rates depend on the card itself, but for every dollar you spend with your credit card you get a certain number of reward points that can be converted into free flights.
For people not interested in frequent flier miles, better option is a card that offers cash-back rewards. This means that a certain percentage of your every purchase is returned to you to spend on something else. This sounds great, but, of course, only works if you have adequate levels of financial discipline. Even if you manage to get more cash back rewards with more purchases, you’ll be able to enjoy those benefits only if you pay your balance in full each month. Otherwise, you’ll spend way more than your rewards on interest.
To conclude, in today’s modern world, having a credit card is inseparable from adulthood and financial stability. It’s impossible to build a credit score without it and you’ll be expected to have it if you wish to travel comfortably. Of course, keep in mind, there’s no such thing as free money, everything you spend needs to be repaid eventually so be careful what you’ll use your card for.