At some point there was a switch when using a credit card seemed like a bad move, like it was frowned upon because if you were using one it meant that you didn’t have the money to make the purchase. Now while I guess that may be true for some, especially to those that went into debt, but actually now, using a credit is actually financially smart and is not a bad idea to put the debit card and cash away and start using a credit card for every purchase that you make.
Builds Credit
For starters, using a credit card for purchases and then paying off the balance each money builds credit. Now that is important because if you want to pay the lowest amount of interest possible, then you need an almost perfect credit score, otherwise you could be wasting hundreds of dollars a month in interest. By charging and paying each month you are developing a solid payment history, your credit limit will continue to rise, and you will make good use of your available credit, keeping debt low and increasing your credit score in the meantime.
Protects Your Bank Account
There is so much fraud these days you hear it all the time. Not only from those scammers that take a quick picture of your card while paying a tab or at the gas pump, but even now retail stores and even credit bureaus are being hacked, compromising your information. By using a credit card, at least if you get your info stolen and are disputing any charges, you don’t have to worry about your bank account being cleaned out in the meantime, and you can wait for the charges to fall off without being held responsible. With a debit card, your account will remain empty, or overdrawn, until the charges are reversed.
Pay Back the Next Month
One good thing about a credit card is that you can charge all month and it’s due the next, giving you a paycheck or two to have the money to pay off the balance. This can also be a negative as well, if you are having trouble keeping your spending and the balance down, so it’s important to make sure you are only making the necessary charges, otherwise if you start carrying over a balance to the next month you will be charged interest, which can add up quick.
Capitalize on Rewards
Last, but certainly not least, is the credit card rewards that you can earn just by making the normal purchases that you were going to make anyways, and not earn anything in return. If you pick the best rewards card you can be approved for, you can earn points, miles, or even dollars on the purchases that you make, which even if it’s a few hundred dollars a year, it’s free money that you can use to spend on yourself on items that you have been wanting but could not pull the trigger on making the purchase.