Three Benefits Of Using A Credit Card

Post by NeilMc on March 1, 2010 · Under Featured Articles, Hints and Tips, Personal Finance, Self Help, credit cards, interest rates · Comment 

Most of the personal finance pieces you read on credit cards are usually centred on mistakes made using them, and the great evil of carrying too much debt. In actual fact a credit card, if used correctly, can be an extremely useful thing to have, and can have a number of advantages.

So why so much online angst over credit cards? Well the very real overwhelming fear that most people have of being in over their head in debt. Others worry that having a credit card, whilst not resulting in too much debt, may lead them to spend more money than they ordinarily would.

A lot of people who don’t have credit cards, just don’t see the point or any benefit from owning one. So the purpose of this piece is really to show how credit cards, if used correctly can be really beneficial.

1) Get Out of Debt Using A Credit Card

It may seem counter-intuitive that a credit card can help you get out of debt. If you tend to rack up huge bills that you struggle to pay at the end of every month, you might even think the notion a credit card can help you clear your debt is a joke.

The fact of the matter is there are a ton of 0 per cent balance transfer credit cards out there, that allow you to transfer an existing balance on a card, for a small fee onto another card, which doesn’t rack up any interest charges for the time the offer is valid.

So if you carry existing debt, a zero per cent balance transfer credit card allows you to establish and define your debt, and allows you to stop letting your current debt snowball, and pay it down instead.

Balance transfer credit cards only allow you to shift existing debts from your existing credit cards on to the new card, so it won’t be useful if you don’t have a credit card already, and if you don’t clear up the debt before the interest free period expires, then they can start attracting hefty interest, so you should be aware when the period expires, and ideally if the balance has not been cleared, find another balance transfer deal you can shift the debt too.

2) You Can Make Money Using A Credit Cards

Charging your weekly grocery shopping or petrol bill to your credit card might be enough to send a shiver down your spine, but the fact of the matter is, if you know you can afford to clear your credit card bill at the end of every month, then using it do your shopping can earn you money.

By now you are probably wondering how the devil that works, well the simple answer to that is cash back.

Some credit cards offer you cash back on your purchase, and if you get a new card the amount can be up to 5 per cent during the introductory period and then between 0.5 per cent to 1.25 per cent afterwards, depending on how much you spend.

Cash back means you can go about doing your daily shopping, in the knowledge that you are earning or saving on everything that you buy. You just need to be careful and remember that if you don’t pay off your credit card bill at the end of the month, you will be hit with interest rate charges.

3) Credit Cards Protect Yourself From Being Ripped Off By Retailers

Credit cards are quite heavily regulated by the government, and this means there is a certain amount of protection guaranteed by the government when you spend on one. If there ends up being some kind of problem with the completion of a purchase, then your card issuer is liable for refunds, and this means that when you spend or buy something using your credit card, there is an added level of protection that prevents you from being ripped off.

Credit cards really do have their benefits if you use them wisely, so be careful.

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