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9 Reasons Why You Need a Credit Card

From cash back rewards to lounge access and free flights: here are the top reasons why people use credit cards. What does it mean for you?
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: April 15, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: April 15, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Table Of Content

man using a credit card
(Photo by Sundry Worawee Antonio Guillem/Shutterstock)

Credit cards may be an easy-to-use financial tool for regular transactions like petrol, groceries, and other products and services. Because the money to buy these things isn't always available immediately, it may also be an excellent resource for buying expensive products like jewelry, TVs, and vacation packages.

There are infinite reasons why you should use a credit card so long as you are responsible for handling your credit spending and payments.

Credit cards may be a tremendously helpful financial instrument despite their occasionally negative reputation. It would help if you tried to utilize them frequently and make as many purchases as possible, as long as you can handle them responsibly.

Here are ten reasons to use your credit card:

1. It Helps Build Your Credit

Using credit cards responsibly is one of the most effective ways to raise your credit score. The fact that you used your cards and subsequently made payments on them is something that will be recorded by the companies that keep track of your credit.

Even though you must deposit when getting a secured credit card, doing so can help you establish your credit history and eventually make you eligible for unsecured cards or bigger loans.

Hopefully, your card will have a consistent history of on-time payments. Because your payment history is the single most significant component in determining your credit rating, this may significantly influence your credit score.

2. Purchase Protection

Assume you buy a new laptop computer and pay for it in full with a credit card that covers purchases. Suppose the laptop stopped working within the period covered by this policy. In that case, you could count on the purchase protection on your credit card to fix or replace the item up to the policy's limits.

As long as the item isn't stated as an excluded item in your card's benefits guide, it is instantly eligible for coverage after you pay for it using your credit card, rewards points, or a combination of the two. At the same time, your buy protection coverage is still active.

You are usually directed to submit a claim by phoning a claims hotline or completing an online claims form if your item is damaged or stolen.

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3. Sign-up Bonuses

When you get a new credit card, nothing beats the chance to get a welcome bonus. People with good or excellent credit often get approved for credit cards that offer prizes of $200(or more) or reward points if they spend a certain amount (anywhere from $500 to several thousand dollars) in the first few months after opening the account.

For example, if you open a Chase Freedom Flex Card and spend $500 on purchases in the first three months, you will get $200 cashback. Here are some of the best cards with welcome bonuses:

Card
Bonus
Annual Fee

Discover it® Cash Back
Cashback Match All cash back earned at the end of the first 12 months is matched.
$0

Marriott Bonvoy Boundless Card review 2019

Marriott Bonvoy Boundless® Credit Card
3 Free Nights 3 Free Nights (each night valued up to 50,000 points) after you spend $3,000 on purchases in your first 3 months from your account opening
$95

chase freedom unlimited card

Chase Freedom Unlimited®
$200 Earn a $200 bonus after you spend $500 on purchases in the first 3 months from account opening.
$0

Capital One Savor Cash Rewards Credit Card
$300 $300 cash bonus once you spend $3,000 on purchases within 3 months from account opening
$95

4. Universal Acceptance

A credit card is a must when making purchases while away from home. A credit card makes reserving travel and lodging more straightforward than a debit card. In most cases, rental agencies will put a hold on your card for several hundred dollars. With a debit card, the delay might be inconvenient.

As a result, credit cards are generally more widely accepted than debit cards worldwide. It's a good idea to utilize your credit card's conversion rate abroad rather than the expensive rates offered at airports.

5. Rewards, Cashback and Travel Miles

People who use credit cards can get points and rewards for every dollar they spend. Many reward credit cards give extra points for spending in certain places, like restaurants, grocery stores, and gas stations. When you earn enough points, you can use them for travel and gift cards from stores and restaurants.

There are almost as many cards as there are rewards programs. The key is finding a rewards program that fits with how you already spend money or works with a store you like. You can use reward points to get rewards from them.

For example, you might be able to get free travel by using credit card miles or points. If you use your cards, you might even get cash back on purchases you make.

6. Improve Budgeting

It's a good idea to keep track of your spending since it will show you where you can cut back to increase your savings and where your spending may be out of hand.

When you pay with cash, keeping track of your spending can be challenging since you must remember to save your receipts or record each transaction.

You can track your spending with a credit card in 3 simple ways:

  1. You can use the credit card app of the company whose credit card you are using.
  2. Examine the transactions that have been made in your online account.
  3. You can use the credit card app of the company whose credit card you are using.

7. Short Grace Period on Purchases

When you buy something with a debit card, the money is taken right away. When you purchase something with a credit card, the money stays in your checking account until you pay the bill. The time between the conclusion of a billing cycle and the day on which your payment is due is known as a grace period.

If you fully settle your debt by the due date, you cannot be assessed interest during this period. Companies that accept credit cards are not compelled to offer a grace period. The majority of credit cards do, however, provide a grace period for purchases.

For example, if you pay off a charge on the 5th, payments from the 9th through the 13th are also included in the grace period. Most of the time, the grace period is 15 days. Still, some banks and credit unions give a more extended grace period of 21 days.

8. Help Managing Debt

A balance transfer is when you move your debt from one credit card to another using the same or a different credit card. You can transfer balances from other obligations, such as auto loans and payments made on a monthly installment plan, onto a balance transfer credit card.

Of course, you will be responsible for making the payments on your debts. However, if you transfer the debt to a card with a reduced interest rate, you will save money by paying off the loan.

Consolidating your credit card debt and simplifying your life may both be accomplished through balance transfers.

9. Easy Borrowing With Long 0% APR

For young people just starting in their careers, where pay is often low, it can be hard to save enough money or have an emergency fund big enough to cover any unexpected costs. In this case, a credit card could come in handy.

One of the best ways to borrow money cheaply is with the right credit card. With a credit card that charges 0% APR on purchases, you can borrow money for over a year, whether you want to pay off old debt or build up new debt.

Card
0% Intro
Annual Fee

citi double cash

Citi® Double Cash Card
18 months on balance transfers
$0

citi simplicity

Citi Simplicity® Card
12 months on purchases and 21 months on balance transfers
$0

Wells Fargo active cash card

Wells Fargo Active Cash
15 months on purchases and qualifying balance transfers
$0

Capital-One-Savor-One

Capital One SavorOne Rewards
15 months on purchases and balance transfers
$0

us bank visa platinum

U.S. Bank Visa® Platinum Card
20 billing cycles on purchases and balance transfers
$0

How to Use a Credit Card Smartly?

A credit card can be extremely helpful in managing your money if you use it smartly.

Your credit score can go up if you consistently pay on time. Some cards give you rewards for purchases or even 0% interest for a short time on balances you transfer from other credit cards.

  1. Utilize the card for necessities only: Using credit cards responsibly is essential. Spending money carelessly might result in debt. You can use credit cards in an emergency. Use the credit card as a short-term loan, and then pay it off as quickly as possible to reduce or prevent interest rates.
  2. Pay off your credit regularly: If you pay off your credit card balance in full every billing cycle, you won't have to pay interest on your purchases. If you don't spend more than you can pay off in a given month, you won't have to pay interest on your credit card purchases.
  3. Avoid exceeding the limit: The basic premise of making purchases using a credit card is that you are essentially spending money you do not possess. This might be an enticing opportunity for first-time users to spend more than they can afford. The first thing to do is never pay more than your credit card allows. Credit cards should never be used for more than two-thirds of their limit.
  4. Keep track of your spending: To use a credit card right, you need to be responsible and know how you spend your money. Only if you keep a detailed record of everything you spend will you be able to find a transaction you didn't expect quickly.
  5. Use rewards: Almost all credit cards provide loyalty incentives and rewards. Credit card owners can get e-commerce discounts, complimentary movies, and cards with free hotel nights. To maximize them, check your credit card issuer's reward program and stay updated.

What It Means For You?

If you know how to use it effectively, managing your finances using a credit card may be a beneficial method to do it. Your credit score has the potential to improve if you make all of your payments on time.

Some credit cards even provide rewards for making purchases or 0% interest for a limited period on balances transferred from other credit cards for a limited period. If you're not sure which credit card you should get, make sure to shop around and compare benefits based on your own habits

FAQs

Utilizing credit cards is a simple process. If you walk into a store, you could be asked to put your credit card into a chip reader or swipe it at the register when you try to pay for something.

You can use your credit card for purchases like bill payment, travel, shopping, dining, home furnishing, emergency, etc.

Credit cards may be used for nearly any transaction these days. Some individuals do not even carry cash anymore because of how widespread credit card acceptance has become.

Your credit card account will be closed if you do not use it often enough, so it is a good idea to use each card at least a little bit. Your credit score can go down if you close an account, so keep your cards open and active as much as possible.

When money is tight, using a credit card is a practical method to tackle the situation. It might be helpful to have this when you need urgent money but do not have cash on hand.

Credit card management may be helpful if done correctly. If you make all your payments on time, your credit score may rise. Some credit cards offer incentives for purchases or 0% interest on transferred balances for a limited time.

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Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
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Welcome Bonus:
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Rewards Plan:
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Welcome Bonus:
$200 Earn a $200 bonus after you open & fund a Rewards Checking Plus account & make 3 debit card transactions within 60 days. If you previously opened a checking account through Upgrade or do not do so as part of this process, you are not eligible. Payout made within 60 days of meeting the conditions.

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Welcome Bonus:
$250 $250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
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Welcome Bonus:
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Welcome Bonus:
50,000 miles 50,000 bonus miles after you spend $3,000 in your first six months
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
Picture of Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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Welcome Bonus:
80,000 points 80,000 Membership Rewards® points after you spend $8,000 on purchases on your new Card in your first 6 months of Card Membership

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Rewards Plan:
2X – 6X 6 Marriott Bonvoy points for each dollar of eligible purchases at hotels participating in the Marriott Bonvoy™ program, 3 points at Worldwide restaurants and on flights booked directly with airlines and 2 points on all other eligible purchases
Welcome Bonus:
95,000 points 95,000 Marriott Bonvoy bonus points after you use your new Card to make $6,000 in purchases within the first 6 months of Card Membership

Amex Delta SkyMiles Platinum card

Rewards Plan:
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Welcome Bonus:
50,000 miles 50,000 bonus miles after you spend $3,000 in your first six months
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
Top Offers From Our Partners

amex platinum

Rewards Plan:
1X – 5X 5X points on up to $500,000 spent on directly-booked airfare and flights and prepaid hotels booked through American Express Travel (per calendar year), 2X points on prepaid car rentals through American Express Travel and 1X points on all other purchases
Welcome Bonus:
80,000 points 80,000 Membership Rewards® points after you spend $8,000 on purchases on your new Card in your first 6 months of Card Membership

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Rewards Plan:
2X – 6X 6 Marriott Bonvoy points for each dollar of eligible purchases at hotels participating in the Marriott Bonvoy™ program, 3 points at Worldwide restaurants and on flights booked directly with airlines and 2 points on all other eligible purchases
Welcome Bonus:
95,000 points 95,000 Marriott Bonvoy bonus points after you use your new Card to make $6,000 in purchases within the first 6 months of Card Membership

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The product offers that appear on this site are from companies from which this website receives compensation.

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