You will often hear that credit cards could pave the way for unhealthy spending and get you into debt. The truth is that in some cases this could to arrive. But credit cards could also help your finances improve significantly. Here’s how.
1. Cash Back Rewards Can Boost Your Savings
Many credit cards give you cash back for items you already buy. That alone makes them interesting to use.
Imagine that you typically spend $ 1,000 per month on essential bills like groceries, gasoline, drugs, and clothing. If you charge these expenses to a credit card, you might get some of your purchases back in cash. Even though you’re only eligible for 1% cash back, that’s still $ 10 more per month, or $ 120 per year. It could be a good addition to your savings account.
2. The protections can protect you against fraud
Credit card companies use different tools and algorithms to detect fraud before it becomes a problem. If someone gets hold of your credit card number and tries to make unauthorized purchases, your credit card company can notify you and prevent those transactions from happening.
Equally important, once you realize that a criminal has stolen your credit card number, you can be inspired to do a more thorough investigation of your various accounts to make sure others haven’t been. compromise. Or, to put it another way, using a credit card could actually prevent you from falling victim to real identity theft.
3. Credit cards can make it easier to track expenses
When paying for cash purchases, it can be difficult to keep tabs on how much you spent and where. The great thing about credit cards is that you can log into your account at any time and see what purchases you’ve made in a given week, month, or year. The result? Simpler and more efficient budgeting.
Tracking your spending is an essential step in reaching your savings goals and avoiding going into debt. And having your various charges available in summary form on screen (or on a paper statement) is a great way to stay organized and aware of your spending.
4. Credit Cards Can Help You Build Your Credit
One of the problems some people face when trying to borrow money is that they don’t have a strong enough credit history to qualify for a loan. The great thing about credit cards is that using them can help you build a credit history. If you pay your bills on time every month, they could help your credit score reach favorable territory.
Once that happens, borrowing money could become easier and cheaper. But without such a strong credit history or credit rating, you might find yourself forced to borrow money at a higher interest rate.
Before you think of credit cards as bad, think about the financial benefits they offer. There are a number of ways that there are a few ways that using yours could really be to your advantage.