Are you ready to learn why many wise American’s are now choosing to use credit cards instead of debit or cash for their spending?
It makes perfect sense to think about the way that you buy and use your credit to your advantage.
Gone are the days where credit cards are tucked away just for bigger purchases like holidays once a year – smaller, every-day use is now seen as the way forward.
Oh, and great news!
Absolutely no need to worry about landing yourself in debt if you stick to a few basic principles.
Read on to find out how you can benefit by spending on a credit card.
So, lets talk about the benefits of using your credit card for most purchases…
If you are using you debit card or cash for the most part – it won’t improve your credit score. Credit card companies report your spending to the credit bureaus which builds your credit score up so you can get more credit, more easily in the future.
Good credit equals:
- Low interest rates on credit cards or loans
- Approval for higher limits
- Easier approval for tenant screening for renting
- Better car and homeowner insurance rates and avoiding security deposits for utility bills.
Cardholders can earn rewards just by using their credit cards for their usual spending. Rewards can range from 1% – 2% cash back on spends which means less to pay back on your bill each month. Some also offer points for travel and miles.
Choosing a card that best fits your lifestyle and in turn your spending is a must. This way you will get more rewards andbenefit most from using the rewards regularly.
These are great perks that, so long as you keep good financial habits and make sure that you pay your balance on time in full you could easily earn over $2000 over a five year period.
There are many credit card providers that offer welcome bonuses, meaning that in your first year you could earn over $500.
So long as you don’t become tempted to over-spend (which could be counter-productive if you end up paying more in interest) the rewards system is a great tool to earn a little extra cash.
If you build your credit up to a category of either good or excellent (over 670) you can have a reward card. If you aren’t already in one of these categories, using your credit card for most of your spending can help you gain a reward card.
Cash can be easily lost or stollen which means you won’t be able to get your money back.
If your debit card is stollen your money will be gone forever and you may not be able to pay your bills, checks will bounce and payments declined. This will only bring your credit score down.
Using your credit card for spending means you will still have money in your regular debit account if this ever happens. You can still pay your bills and make sure that no checks bounce or payments declined, so no need to sweat it. You can live as normal and you won’t be penalised in any way even if it takes a while for the fraudulent activity to be rectified.
Ensuring Vendors Stay Honest
Nobody wants to spend money on something that isn’t what they wanted. Say you hired a decorator to wallpaper throughout your home. The contractor finishes the job before waiting for it to set – all looks perfect so you draw up a check for $3000 for payment.
The next day you wake up and realise much of the wallpaper has peeled off. You’ve already paid the contractor, can’t get hold of them and you’re not insured because you paid by check. You could file a report with your state licencing board, but this could take months leaving you out of pocket and the contractor would still have your money.
On contrast, if you had paid for the work on your credit card you can raise a dispute with the card issuer and they would withhold the funds from the contractor. They might even be able to recommend trusted contractors to re-do the job to a high standard, so its win-win.
Lesson learnt, using your credit card would have been a smarter move.
It’s important to remember…
It’s clear that using your credit card for most purchases is more beneficial but it’s important to stay smart with your spending.
Of course enjoy the perks. That is what they’re there for after all, but sensibly – if you over spend you risk losing control of your finances.
The best thing to do is draw up a budget. You can do this by calculating all of your income and expenditure – as you aren’t spending more than you’re left with and you are in control.
Time to enjoy the benefits and perks!
There are a few purchases that you shouldn’t necessarily use your credit card for…
If you use your credit card for tax payments, there is added cost. Although the Internal Revenue Service (IRS) will allow this form of payment, they will charge 2% for the convenience.
It can also lower your credit score, as it is may not be regarded the most responsible way to manage your finances.
This principle applies to any transaction where a fee is involved – so keep your eyes peeled!
- Something that you cannot afford
Don’t give in to temptation. Stay within your budget. You will only end up struggling to keep your balance up-to-date. This can be hard to manage and you don’t want to end up in debt.
Here’s the bottom line – if you create a budget that you can stick to, and pay for most things on your credit card you will benefit more than using debit or cash.
Now people are realising the benefits, they are using their credit cards a lot more.
Are you smart enough to join them?