Credit cards offer Many Benefits Over Debit

Why Do I Need a Credit Card?

Some personal finance experts spend a lot of time and energy trying to prevent us from using credit cards – with good reason. Credit Cards are often misused and abused, and credit card debt can be devastating to your financial future. But when used responsibly, you’ll find you are much better off paying with credit than with debit.

While debit cards are an easy-to-use and convenient payment tool, there are several benefits to reaching for a credit card next time you are at the register. Here are our top reasons why the type of plastic in your wallet truly does matter.

Boost your credit history and score

Now or in the future, which of the following do you hope to purchase?
a) A home
b) An automobile
c) College tuition
d) Insurance
e) All of the Above
f) None of the Above

If you answered a, b, c, d, or e, chances are that one day (if not already), you will need credit to assist in your purchase of one of these items.

If used appropriately, getting a credit card will help establish your credit history and improve your credit score. The higher your credit score, the less you have to pay in interest on a wide variety of credit products.

Establishing a good credit score can save you thousands over the course of a single loan.

Additional Security

With Christmas shopping season underway, millions of Americans are concerned about credit/debit card fraud. In the unfortunate event of a breach, however, debit card users could face much bigger headaches than credit card users.

That’s because debit and credit cards are treated differently by consumer protection laws. Under federal law, your personal liability for fraudulent charges on a credit card can’t exceed $50. For debit card users on the other hand, you could be liable for $500+, depending how quickly you report the fraudulent charges.

Also, what if you need the funds now to pay rent or other expenses? With a credit card, the money never leaves your account, and you do not have to pay any contested charges on your bill. On the other hand, if you used a debit card, you might be left waiting until your bank resolves the issue and returns the funds to your account.

Rewards

In addition to building and establishing a credit score and additional security measures, credit cards also offer consumers with valuable rewards. From cash back, travel points, or a rewards points system for redeemable prizes, using a credit card can help one save hundreds or thousands of dollars a year.

Purchase Protention

Stolen jewelry or broken smartphone? If you purchased the item with a credit card that has a purchase protection plan, you may be in luck.

When you charge a covered purchase on your card, purchase protection can help protect your purchase for up to 90 days if it is stolen or accidentally damaged. However, it is ultimately up to the credit card company to decide whether your purchase protection claim gets approved.

If you don’t already have a purchase protection plan with your current credit card, it may be worth considering when opening up your next credit card.

Final Verdict:

While credit cards are certainly for not for everyone, you may be cheating yourself by shunning credit completely. Credit cards can be an important and cost-saving tool when used effectively. Just make sure to use your card properly and pay your bills in full and on time.

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