Credit cards are convenient to buy things like groceries, gas, and other goods. You can also use your credit card for big-ticket items, like jewelry, televisions, travel, and other items. Check out the perks of using a credit card.
Are Debit and Credit Cards the Same?
No. A debit card is linked to your checking or money market account. When you swipe your card, the balance is taken from that account. You have no interest charges because you don’t owe anything after the transaction. Credit cards work as a line of credit. The line of credit dictates the maximum amount you have available to make purchases. Credit cards help you build credit. Debit cards do not.
The Benefits of Using a Credit Card
Credit cards can be used to earn rewards, pay for travel, handle unplanned expenses, and build credit. A credit card with cash back rewards does just what the name implies. When you make purchases, you are rewarded with a portion of your cashback.
This is just one type of reward. Some cards will give you a discount on gas and miles that you can use for travel. If you use your credit card regularly, getting rewards is the biggest advantage. They allow you to pay for something that you may not have the cash to pay for now and provide you with benefits in the future.
According to the experts at SoFi, a credit card can help you “get rewarded for spending on popular brands.” They can be beneficial when you travel as well. Car rental companies and hotels typically require that you put a credit card on reserve to book a vehicle or room. Credit cards give you more purchasing power.
Other credit cards have fraud alerts. This is a safety net if someone steals your card while you are traveling. When there is potentially fraudulent activity, you will get an alert via email or text. You can stop the transaction.
Since the credit card is not connected to a savings or checking account, there is little chance of a thief getting access to the money in your account. For example, many credit cards have a zero-dollar fraud liability guarantee. This means that if someone steals your card, you are not responsible for anything.
Can Credit Cards Be Used Responsibly?
Absolutely. A credit card is a financial product. When you decide to open a line of credit, you need to think in advance about how you are going to make payments and what to do with this newfound purchasing power.
It is best to plan how you will pay off your balance. If you use your credit card without thinking about how you will pay it off, you could find yourself in financial trouble.
Using a credit card can be advantageous. However, you have to ensure not to use your credit card for impulse purchases or items that you cannot afford to repay in a reasonable amount of time.
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