We’re all looking for ways to save and get wise with our spending these days. So why would using a credit card to spend, transfer and borrow money over a period, be good for our personal finances? If you take some time out to do the math, it’s possible to see the positive impact sensible borrowing can have. Let’s take a look at some reasons why you might need a credit card in your purse…
Number one on our list is the cash back reward for paying off your bill each month. Check on one of the comparison sites to get information on credit cards and see which credit card providers offer this feature, and whether they pay out monthly or annually.
On a similar note, some credit cards offer rewards in the form of vouchers. This works by accumulating points with each dollar you spend on your card. Vouchers can usually be ‘purchased’ with a set number of points for a set monetary value.
Another of the great benefits of credit cards comes with those offered by a particular brand. This might be your favorite retailer or airline, for example. With this type of credit card you get discounts on purchases with that brand. Just be sure there are no hidden card purchase charges to reduce the return.
Most people would never think that increasing your credit score could be on the list of the advantages of credit cards. But with sensible spending, it’s actually true. Clearly, if you’re the sort of person to run up huge bills across several cards that you can’t pay off, this isn’t going to look too good to those interested in lending you money for a mortgage. But if you’re sensible and your payment history demonstrates that you regularly pay off your bill on time, it’s actually a good way of demonstrating your reliability. Having no credit card can be harmful to your credit score.
Theft and loss protection
Finally, spending with credit cards means you get protection against theft or loss of your wallet. If you carry cash, it’s unlikely you’ll see any of it again. If, on the other hand, you tend to pay with plastic (and you haven’t been fraudulent or negligent) the majority of card providers will cover most of the loss on the card.