Do you know all of the beneficial attributes of having and using a credit card? Of course, responsible spending habit behaviors should always be taken seriously; otherwise, you become faced with a severe disadvantage; such as, the ability to take advantage of all wonderful, hidden perks offered to consumers with credit cards. Yes. It is not always the case that fine print is a pitfall of extra fees, there are several, excellent benefits and bonuses, you can receive, if you know what to look for and how to access them.
- Credit Cards are Beneficial
Different Names, Different Purposes
For clarification purposes, let us first, cover the basic distinguishable differences between a debit card, a charge card and a credit card. The three all might be plastic, but each card is significantly different; such as in the case of available funds and limits upon spending and repaying. If you are unfamiliar with these types of cards, it would behoove you to carefully sit back and analyze the pros and cons to each one.
- Debit Card - only the money funds in your personal bank (or credit union) is available for you to use. In addition, the bank immediately deducts your purchase at the time you buy an item or use it for a service. Bottom line, you are basically using an old fashioned form of a check, just without the paper and the need to write and fill it up at the counter, usually holding up the line behind you.
- Charge Card – there may be tiers of users, but generally speaking, there is no limit (again to a degree) that you can use on a monthly basis. Of course, you must pay off the entire balance each month. Any grace period is practically non-existent and you will be heavily fined beyond your imagination. You risk having the charge card taken away from you, if you make a charge or charges beyond the scope of your ability to pay.
- Credit Card – there is a set limit on the amount of money that an honest consumer can charge, meaning there is a cap (each individual has a predetermined amount, dependent on their desire and their credit worthiness determined by the lender of this type of card). The bonus is that the total amount is not demanded to be paid in full at the end of every monthly statement period, nor are the funds automatically going to be withdrawn from your account at the time you make the charges.
The Winner is…
As you can clearly see, each type of card has advantages and disadvantages, but the prize among the three truly goes to a credit card for numerous reasons. The top one is that you have access to money that is not already in your bank account. This beneficial because you can make purchases that you normally would not be able to do without already having the money in your account compared to the debit card option.
Although a charge card with its potential unlimited charging caps requires a full payment every month with no exception; whereas a credit card basis your monthly payoff to be a mere fraction of the total amount you used on it in a monthly billing cycle.
- Say Yes to a Credit Card
Building Credit Worthiness
One of the most known reason people use a credit card (besides having the resources to spend without having the funds on hand) is the all important credit score, each of has when it comes to making the major purchases; such as an automobile or the financing of a new house.
Your credit score always increases when you use a credit card and make sure that you stay within your means of repayment each month. Thus, be certain to not go overboard on frivolous spending sprees, but do indeed, use your credit card to prove you can pay it off and remain an on budget.
- Receive Lower Interest Rates with Good Credit History
Opening the Doors for Purchases
If you are not in the market to buy a house or a car, you might be looking to rent or lease one. Without a credit card, it is almost impossible to increase your credit score, thus a low credit score will cause you to be turned down to get into a lease for either of these two places or at the very least, you are faced with an enormous amount of extra paperwork, extra, expensive deposits and searching for a co-signer.
- Avoid Embarrassing, Frustrating Car and Apartment Rental Denials
Secured Verses Unsecured
If you are just starting off or regrouping from previous financial turmoil, there are still plenty of options for you to become accepted to have a credit card. You can begin with an unsecured one, which basically is similar to a debit card because you have to deposit your own fund into the balance in order to begin charging on your credit card. The big difference is that you are building upon your credit worthiness and the amount of your card can and will increase over time; eventually you will become successfully approved for an unsecured card and eligible to not match the funds with your own money.