Credit Cards have a very bad reputation in this day and age. This year has been tumultuous for credit card issuers and credit card lenders as many of them reported high default rates. Also, the average credit card APR sky rocketed to a record high of 14.96 percent this year.
It`s getting expensive to use a credit card, well, that`s what the news is telling us. Fee hikes are to the right and to the left and available credit is scarce. In spite of everything, in some situations credit cards provide the best purchasing option. Instead of using your credit irresponsibly, learn how to correctly use a credit card in place of cash or debit.
Credit cards provide a smart payment option if you are ever find yourself in an emergency without cash or debit or you have to purchase a large-ticket item.
No doubt, having a credit card will affect your credit score. Now it`s up to you to decide whether your credit card usage will positively or negatively affect your credit score. If you pay your bills on time and cover more than the minimum balance then you are on the right track to enhance your credit score, if you find yourself neglecting payments it will be detrimental to your credit score. If you manage to build a great credit score you have access to mortgages, car loans, life insurance and credit cards with lower interest rates.
Ways To Use Credit Wisely:
- Cardholder Protection. More so than debit cards and cash payments, credit cards can help protect you from unscrupulous characters. Most credit cards allow you to negotiate unauthorized payments and payments you`ve made for defective goods. With the help of the Fair Credit Billing Act, consumers are protected from unauthorized charges and are allowed free access to their credit report in order to dispute those charges. With cash or debit cards, if the money is gone - the money is gone.
- Payment Categories. Another benefit of using a credit card is that it separates your payments into different categories. This can be helpful if you need to know which areas are taking up most of your funds. This can open your eyes to areas where you are over or under spending and can help you establish an efficient budgeting plan.
- Extended Warranties. Instead buying that extra warranty that that new vacuum is offering, check and see if your credit card offers an extended warranty. If your credit card has an extended warranty, you can decline the items warranty protection and just use your credit card.
- Rewards. Credit cards offer the best rewards. Many rewards credit cards offer rewards in the form of cash-back, points that can be redeemed in an online mall or catalog or frequent flier miles. Some debit cards offer cash-back incentives, but they are minimal compared to credit cards which offer 1% cash-back on all purchases, and 2% to 5% on rotating quarters.
Sure, using a credit card can be a scary thing, but once it`s done correctly it can actually be beneficial to you and save you a few dollars along the way. Don`t be afraid to use your credit card, it`s there to help.