Credit cards are an important part of life for most people. But those who have never gotten one might wonder whether it is beneficial for them to apply for one or not.
What are the benefits of getting a credit card?
In this article, we will take a close look at the benefits of getting a credit card and why it might be the right choice for your financial present and future.
Reasons to Get a Credit Card
If you ask your friends and family members whether they have a credit card or not, chances are that most will say they do.
In fact, there are a lot of reasons why getting one makes sense. As you might learn at kredittkortinfo.no some of the best benefits include:
- Building your credit history
- Taking advantage of rewards
- Being able to make large purchases.
- Traveling to Wonderful Destinations
- Access to Quick Cash
- Protection Against Fraud
Build your Credit History
Having a good credit history is essential to anyone’s financial well-being because it is one of the key things others focus on when you apply for a loan and other financial products. Click here to read more about this. How good your credit history is will affect the interest rates you end up paying when you take out a mortgage or a car loan.
People will even check your credit history when you apply to rent an apartment. Your credit rating will tell them whether you are a potential good tenant or not.
Getting a card can help you start to build an excellent credit history that will help you down the line. Just make sure to make all your monthly payments on time and never be tempted to max out available credit as this can be seen by lenders as negative and a sign of credit risk.
Take Advantage of Rewards
Consumers should not jump at every credit card offer they get but consider their choices carefully instead. A lot of financial institutions offer attractive incentives and rewards which should be taken into account.
A key requirement is usually to use a certain amount of credit to get the bonus being offered. For example, a cash-back card might provide consumers with 5% of total purchases back once they have accumulated credit to a certain point.
Make Large Purchases
Most of us do not make large purchases on a daily basis, but they do come up. You might suddenly have to buy a car because of a new job you cannot get to otherwise. Or you might suddenly have to take a long-distance trip you do not have money set aside for.
Having a credit card handy to make large purchases that you suddenly need can make life much easier. If you make the payments in a timely manner, the interest will not be significant, and you will be building your credit score for future large purchases as well.
Traveling to Wonderful Destinations
There are plenty of wonderful destinations all over the world worth getting to know. But most are not exactly cheap to get to or explore. You can conveniently use your credit card to pay the expenses of traveling abroad and pay them at a comfortable pace.
What is more, there are even cards that feature low fees and other rewards for travelers. Taking your credit card instead of too much cash can also make your trip a lot safer.
Access to quick Cash
Having access to quick cash can be a lifesaver at times. Unfortunately, most of us do not keep a wad of cash stuffed under the mattress or somewhere else in the house or apartment. A good line of credit can come to the rescue when you have to deal with unexpected expenses in a hurry.
Just make sure to keep an eye on how much cash you take out and the interest rate involved to be able to make payments without issues and maintain your good credit status.
Protection Against Fraud
Credit card companies are constantly on guard against anyone looking to commit fraud. Because of this, they go to great lengths to employ fraud protection and other security measures. Using a credit card instead of a debit card or even cash can help you stay one step ahead of anyone involved with fraudulent activities.
Even when cards are stolen, lenders have ways to deal with the situation effectively to keep themselves and consumers free from financial risk.
When to Apply for a Credit Card
As the saying goes, there is no time like the present, but applying for a credit card is best in the following situations:
When You Turn 18
Becoming an adult comes with many responsibilities and it is the ideal time to start building a good credit history. Applying for a credit card is a great way to get started with your financial future. To get approved, you will have to show a source of income so having at least a part-time job is essential.
When you Want to Build Good Credit
If you do not have much of a credit history to speak of or have made bad financial decisions that reflect negatively on your credit score, you can secure a card for people with bad or poor credit. This will help you start your journey to rebuilding a good credit standing or completely for the first time.
You Want to Make a Significant Purchase
Buying something significant such as an expensive appliance, a vehicle, or even property is not always possible with cash. Making such purchases with a credit card can make everything much simpler, especially if you take advantage of a 0% APR intro period. Find out more at https://en.wikipedia.org/wiki/Annual_percentage_rate
When Focusing on Paying off Debt
Ironically, some people might think of credit cards as a way to get into debt, but it can be the other way around if managed properly. Consumers with significant debt can opt for a balance transfer card with a lower interest rate than comparable options to focus on paying off debt quickly.
Other Tips
If you would like to make the most of your experience with credit cards, here are a few other useful tips.
Know the Terms and Conditions
A lot of consumers jump at any credit card offer without knowing the terms and conditions. You should take the time to go over the fine print and fully understand what you are getting into.
Make Timely Payments
Financial institutions are not very forgiving when it comes to overdue payments. Making payments on time will reflect on your credit score and keep you flying high with a better and better rating.
Never Use Up All Available Credit
Just because you have a $10,000 limit on your card does not mean you have to or should use it all. The amount of debt you have in relation to your credit limit is considered your “credit utilization ratio.” When this ratio is high, financial institutions begin to look at consumers as a risk and their ratings are affected.
The Bottom Line
Getting at least one credit card with good terms and conditions can help you with a good credit score, beneficial rewards, and provide you with purchasing opportunities you would not have otherwise. Just make sure to follow our tips to make the right one work for you.