Many of us are used to thinking of credit cards as evil. And it’s true that carrying credit cards and using them too freely, without a plan for paying off the balances, can lead to crushing high-interest debt.
However, having a credit card doesn’t have to lead to debt bondage. With the right mindset, a credit card can be a good idea. With the right approach, a credit card is just another financial tool.
Convenience
First of all, a credit card is convenient. It’s much more convenient to carry a card than it is to carry a wad of cash. When you travel to other countries, a credit card is far more convenient than traveler’s checks. With an increasing number of card issuers waiving foreign transaction fees, you can also save when it comes to converting cash and traveler’s checks to local currency.
The convenience of plastic as compared to cash can’t be denied. And, in some cases, a credit card can even be more convenient than a debit card — even though they are both plastic. Some of the PIN requirements in other countries are different from the United States, and trying to use a debit card in other countries can be difficult as compared to credit.
Security
Credit cards are more secure than cash. If cash is stolen, it’s gone. Plus, many credit cards come with perks like extended warranty protection and price protection. Use your credit card to make a major purchase instead of cash, and you get extra protection.
Another nice feature of a credit card is that you are using someone else’s money. This means that if a fraudulent purchase is made using your credit card, it doesn’t come straight out of your bank account. You have time to dispute the charge, and take care of the problem, and it doesn’t impair your checking account.
This isn’t the case if a fraudulent debit transaction takes the money straight out of your checking account. That money is missing from your account for the time it takes to get things sorted out. This can impact other bills you pay, and reduce your access to your own money. Keeping your debit card out of the mix, whether you are traveling or making online purchases, reduces the chance that someone will get direct access to your bank account.
Rewards
Finally, you can reap financial benefits through credit card rewards. As long as you are careful to only buy what you had planned to anyway, and you pay off your balance each month, you can get free stuff, cash back, and discounts when you use your credit card.
Don’t shun your credit cards; the right credit card can help you build good credit, save money, and protect your other financial assets.
