The Advantages of Credit Cards
Credit cards are a popular form of payment for in-person and online purchases. People use them every day without thinking very much about their specific benefits. Credit cards offer a wide range of advantages to consumers, allowing them to shop without carrying cash and to buy expensive items. They offer protection from certain problems and may even let users rack up rewards.
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Purchasing Power
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Credit cards allow consumers to purchase expensive items without having to save up the money. The purchase can be charged and paid off over time. This greater purchasing power is also handy in an emergency. For example, a credit card can be used to pay for unexpected expenses such as medical bills, dental work or car repairs that would be too expensive to pay in cash. They can even boost a user's credit rating if used responsibly.
Convenience/Security
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Consumers who carry credit cards don't have to carry large amounts of cash. The credit card can be used for daily purchases and paid off at the end of the month if desired. This eliminates the risk of having cash stolen. Even though a credit card may be lost or stolen, the Credit Card Advantages website says that your liability is limited by law to $50. You can also file a dispute if you use your credit card to pay for a defective item or unsatisfactory service and the merchant refuses to help you directly.
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Online Purchasing
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Credit cards provide a convenient way to make purchases online. You can pay for products immediately with your card, and most card issuers give you protection if you have a dispute. Technically, the law says that you can file a dispute only when you bought something in your state of residence or within 100 miles of your address. However, many credit card issuers waive this requirement to encourage online purchases.
Rewards/Benefits
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Many credit cards offer special rewards and benefits. For example, some cards allow you to earn airline miles or points that can be redeemed for gifts or cash. The Credit Card Advantages website says that some also provide benefits like free travel insurance, rental car insurance, and protection for theft, damage or loss of items purchased with the card. These benefits are most common with gold and platinum cards.
Credit Rating
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Credit cards can help boost your credit rating if you always make your payments on time. According to Fair Isaac Corp., 35 percent of your FICO credit score is based on your payment history. By using credit cards regularly and making your payments promptly, you can add points to your score. Proper credit card use will show other potential lenders that you are financially responsible.
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References
- Photo Credit Photo: Wikimedia Commons (Lotus Head)
