10 Reasons Why You Should Use a Credit Card

Many financial experts advise us to prevent us from using credit cards. Many of us are also tormented with credit card arrears. But, contrary to it all, if you can use a credit card correctly and responsibly, you are really much better off paying with a credit card compared to a debit card. Find out why your trusted credit card came out on top.

10 Reasons Why Trumps Credit Debit :

1. Bonus List

Standard debit cards offer zero rewards or very small rewards. Many credit cards, however, offer significant benefits when used responsibly. For example, applicants with good credit can get approved for a credit card that offers signup bonuses worth anywhere from $50 to $250 (and sometimes even more). Other cards offer up a large number of points that can be exchanged for rewards such as gift cards or air travel.

2. Cash Back

If you sign up for the right credit card, you can get anywhere from 1-5% cash back on your purchase.

3. Investment Rewards

Some cards, such as the Fidelity Investment Rewards Gift card, offer higher rate of refund; Instead you have to deposit money back into the Managed Account.

4. Frequent Flyer Miles

It seems like every airline today has at least one credit card. Holders rackup miles at a rate of one mile per dollar spent, or sometimes a mile per two dollars spent. The price of your plane ticket eventually ends up redeeming your miles to determine how valuable these credit card rewards are, but many frequentflyer cards are made very much more valuable with their sign-up bonus mileage, this is often enough to put you 50-100% off the road to a free flight within a month or two.

5. Points

Many gift cards work on a point system where you earn up to five points per dollar spent. When you reach a certain point limit, you can redeem your points for gift cards in some stores. You can also use gift cards as gifts, making holiday and birthday shopping simple and cheaper.

6. Security

Payment by credit card makes it easier to avoid losses from fraud. When your debit card is used fraudulently, the money is lost from your account instantly. Legitimate payments that you've already scheduled online payments or sent checks may bounce off, triggering insufficient funds and making your creditors happy. Late payments can also lower your credit score. It can take a while for fraudulent transactions to be recovered and the money returned to your account when the bank investigates. Conversely, when your credit card is used fraudulently, you do not shell out money, you simply tell your credit card company the fraud and do not pay for transactions that you do not make while the credit card company resolves this problem.

7. Grace Period

When you make a debit card purchase, your money is lost instantly. When you make a credit card purchase, your money remains in your account until a few weeks later when you pay your credit card bill. Hanging on your money for this extra time can help in two ways. First, if you pay your credit card from a high-interest checking account and earn interest on your money during the grace period, the additional interest will eventually add up to a meaningful amount. Secondly, when you're always paying with a credit card, you don't have to watch your bank account balance like crazy to make sure you stay in the black.

8. Insurance

Most credit cards automatically come with a huge amount of consumer protection that people don't even realize they have, such as rental car insurance, travel insurance and product warranties that can exceed the manufacturer's warranty.

9. Universal Acceptance

Certain purchases are difficult to make with a debit card. When you want to rent a car or stay in a hotel room, you will almost certainly have an easier time if you have a credit card. Car rental companies and hotels want customers to pay by credit card because it can be easier to charge customers for any damage done to the room or car in this way. So if you want to pay for one of the items with a debit card, the company can insist on putting holding a few hundred dollars on your account. Also, when you're traveling abroad, merchants won't always accept your debit card as payment, even when it has a big bank logo on it.

10. Credit Building

If you do not have credit or are trying to improve your credit score, using a credit card responsibly will help your credit score because the credit card company will report your payment activity to the credit bureau. The use of debit cards does not appear anywhere on your credit report, however, so it cannot help you build or improve your credit.

When You Shouldn't Use a Credit Card Instead of a Debit Card

Although the advantage of paying with a credit card has more than paying with a debit card, for some people it is still better to use debit. Using a credit card may not be appropriate for you in the following situations :

1. You cannot pay your credit card balance in full and on time. If this is likely to happen to you, stick with the cash to avoid racking costs.
2. You tend to spend more than you can afford. Payment by debit will limit you to spending the money you have already received.
3. You can only get a credit card with a very low credit limit and you have a hard time staying under balance. The cost of exceeding your credit limit is expensive, and doing this can also put a dent in your credit score.

Conclusion

If you already know how to use a credit card responsibly, you really shouldn't use your debit card for anything other than ATM access. And if you do not know how to use credit cards responsibly, now you have more incentives to improve your habits. Many benefits await those who choose to responsibly use credit instead of debit.