Credit cards are a highly popular method of payment in today’s society. They make it easy to purchase things online and help to build credit.
But did you also know that credit cards offer some secret benefits? Read below to find out secret benefits of credit cards.
Credit Cards Over Debit Cards
Debit cards only allow you to spend the money available in your account. Sometimes this is all you need. However, they typically don’t offer any special rewards when you use them.
When using a credit card, you are borrowing money from a lender. The credit limit is the maximum amount that can be borrowed. This limit is based on your credit score, debt, and income.
Most credit cards offer rewards for every dollar you spend. Rewards can be many things, from cashback to airline miles or hotel points. The reward’s value can range from a few dollars to hundreds of dollars.
What Are the Pros of Credit Cards?
There are many pros to credit cards. Let’s take a look at some of the most important ones.
- Credit building: Using a credit card and making regular payments increases your credit score. This is because you are showing that you can handle borrowing money.
- Convenience: Credit cards make it easy to pay for things online. You can also withdraw cash from your account at an ATM.
- Rewards: Credit cards offer rewards, usually per every dollar that you spend. Rewards can be anything from direct cashback to discounts or gift cards.
- Theft protection: If your card is lost or stolen, you are not responsible for fraudulent charges. You can file a claim with your credit card issuer. They will reimburse you for any fraudulent charges.
- Hotel and Car Reservations: When you make a reservation with your credit card, you can receive benefits. For example, many hotels offer free room upgrades and late checkouts.
These are some great benefits of credit cards. Using a credit card for all your purchases increases the rewards and benefits.
What Are the Cons of Credit Cards?
There are also some cons to using credit cards. These are important to know before getting one.
Let’s take a look at them.
- Fraud: Credit cards can be a target for fraud. This is because they have a lot of personal information stored on them.
- Fees: Credit cards come with annual fees, late payment fees, and over-the-limit fees. Make sure you know what the fees are before getting a credit card.
- Short term credit hit: If you end up paying interest on your card, this will be a short-term credit hit. It may take some time to build your credit score back up.
- Debt and overspending: Credit cards can lead to debt and overspending if you’re not careful. Make sure you only use a credit card for purchases that you can afford.
These are some of the cons of credit cards. Using a credit card responsibly will avoid these negative consequences.
Additional Benefits of Credit Cards
In addition to the benefits listed above, credit cards offer a few other benefits.
- Miles: Some credit cards offer airline miles. You can use these to purchase plane tickets at discounted rates. Your flight may even be free!
- Cashback: Some credit cards offer cashback on all your purchases. This is a great way to save money on things you buy regularly.
- Delayed payments: If you need to delay a payment on your credit card, you can. This is a great way to buy time if you’re short on cash. Financing your purchases is also great for money management.
There are many great benefits to credit cards. Be sure you understand the pros and cons before getting one.