The words “credit card” might be a bit taboo for some people. Many folks are afraid of borrowing money because they don’t want to end up with hefty credit card bills. The horror stories about people drowning in debt are enough to scare many people! However, credit cards can be super helpful if used properly. Here are ten reasons why you should have one!
Dispelling Some Rumors
Credit cards aren’t some kind of “trap” that’s going to soak up your entire paycheck every month. They’re useful tools you can access. They’re essentially open lines of credit with upper limits and an interest rate on the money you borrow. If you pay off your cards before the month rolls over, you usually don’t owe anything extra for interest.
Emergencies
The foremost reason to carry a credit card is because you can never tell when an emergency might pop up. It’s comforting knowing that you can borrow a bit of money on credit to help cover unexpected expenses and then pay the charges back when you get a bit more money.
Faster Than Loans
Typically, if you’ve already got a credit card, charging unexpected expenses to your card is much faster than securing a personal loan. This makes credit cards more flexible in a pinch. As such, they’re especially helpful while traveling—hence the prevalence of airline and hotel rewards cards (more on those later).
Building Credit
It also just so happens that having credit cards can help build your credit score. Showing credit bureaus that you’re responsible and timely helps improve your score and makes it easier for you to qualify for more customer-friendly cards, better interest rates on loans, and other awesome benefits.
Habitual Use
Some credit card users employ their cards habitually for recurring bills like groceries. They then make sure to pay the cards off before the month ends so they don’t pay extra in interest. This is a very sensible way to use a credit card as it can build your credit significantly and can also help you earn points for rewards.
Reward Cards
Speaking of reward cards, they’re often the most compelling reasons to own a credit card. Rewards cards, generally speaking, award you points for your purchases. Those points can be redeemed for various rewards, depending on the card. Some people, for example, prefer airline rewards cards that give them free miles for flying. Others use hotel rewards cards that can help them secure free hotel stays.
Cash Back Cards
Similarly, some rewards-style cards are cash back cards. These typically require a high credit score in order for potential users to qualify for them, but they reward you with a flat percentage of the money you spent back each period as long as you’re staying within certain parameters.
Getting Started
Typically, your first credit card won’t be a rewards card. That’s especially true if you’ve got less than ideal credit. Still, a beginner-friendly, low-limit credit card is a great way to get an understanding of the responsibilities of owning a credit card and the habit of paying your bill off each month before it begins accruing interest.
Read More: 5 Easy Tips to Improve Your Credit Score
Self-Control
Owning a credit card is a great way to help exercise your self-control. Sure, you could run up a huge bill on your card by just buying whatever you want without considering the consequences. However, responsible use of your card dictates that you’ll only spend as much as you can comfortably afford to pay back. By living within your means, you’ll unlock the full helpful potential of your credit cards and the ways they can help you reach your financial goals.
Read More: 15 Ways to Improve Your Credit Score
Powerful Tools
In all, credit cards can be powerful tools when used properly. Their flexibility, immediacy, and rewards programs all give them distinct advantages over personal loans. If you’re looking to pick up a starter credit card to help build your credit, speak to your bank today.
Read More: How Prepaid Credit Cards Protect Your Identity
