If you use a credit card correctly, it can be a great personal finance tool. And, the fact of the matter is you really probably need at least on credit card to survive in today’s world. From purchases to building credit, a credit card is a valuable part of your finances–as long as you don’t get carried away.
A credit card can help you build your credit score
A credit card is the easiest way to begin building credit. And you need credit if you want to buy a house or car, and if you want the best possible interest rate (saving you thousands of dollars). Additionally, your credit rating is becoming important to employers and to landlords. Using a credit card responsibly (making purchases that you can pay off each month) will help you build your credit.
Shopping with a credit card
You can save money by shopping online. However, most products bought online require immediate payment through credit card. Besides, using a credit card provides some protection. If you use your debit card online, and someone steals the number and uses it, you are liable for what is spent. With a credit card, you are only responsible for $50 of fraudulent purchases. This rule applies offline as well.
Getting your just rewards
If you sign up for a credit card rewards program, you can get a variety of perks from using your credit card. Travel, free stuff and even cash back are all options. But be careful! If you let the balances add up without paying them off regularly, your interest charges will erase the value of the rewards you get.
Credit card convenience
A credit card offers a strong convenience factor. It means less cash bulging in your wallet. And this is convenient at the store, and also while traveling. Most places take credit card, and you can carry a little cash for the few places that don’t. Plus, the theft protections on a credit card mean you will lose less money if your wallet is lost or stolen. And, if you travel abroad, the credit card takes care of all the foreign exchange (but there is usually a fee).
If you are credit card savvy, you can make your credit work for you as a personal finance tool. Just remember that it is debt, and you should avoid charging more than you can pay off each month (or within two or three months, at most).