Managing your personal finances is quite a challenging affair for most of us.
On one side, you have limited scope for earnings whether you are in a job or into business, and on the other hand, you have endless scope for expenses. As a matter of fact, virtually there is no end to your spending spree.
So, you need to look for a viable solution so that you can adequately meet your expenses.
Actually the solution lies in extending your earning potential.
There are a number of ways to do this. Well, you can take a high paying job; look for some part-time job, or better still start using a Credit Card.
The suggestion may somewhat take you by surprise as there is contradictory opinion surrounding usage of credit cards; however, the underlying truth is that there are numerous benefits of using Credit Card(s). However, the only precaution you have to take is to use your credit card in a responsible manner.
Let’s take an example to show you how credit card can be a life-saver for you. Let’s say you face car breakdown and are short of cash in order to carry out the necessary repairs. There is still couple of weeks when you get your paycheck, and it’s a lot of time considering the gravity of the situation.
Well, this is an emergency situation and only cash funding can enable you to come out of it. You can borrow money, but this is not always easy. Others might be facing shortage of cash. The solution lies in using your credit card to have the repairs done. So, you see that emergency situations (like the one listed above) demand immediate cash and by using a credit card you can finance such expenses easily.
Let us now explore a bit and see the benefits of using credit cards:
Credit Limit: Credit Card helps to provide you with the much needed credit limit. Once you have the credit limit, you need not worry about meeting your emergency situations even when you have acute shortage of cash. So with a credit card, you get a legitimate way to extend your monthly income. You have the peace of mind as you know that you have the finances with you for an emergency or for leisure. You have the purchasing power with you and can use your credit card to make big purchases (as long as you make the full payment due on your credit card before the interest adds up to the borrowed sum).
Convenience: Convenience is another big benefit that you get by using Credit Card. Actually; Using Credit Card is absolutely easy and convenient. Paying with Credit Card is quick and easy. You don’t need to take the pain of counting the cash and coins. Most importantly, the plastic money is easy to carry. You need not load your purse with a large amount of cash. With Credit Card, you even do not require to carry your checkbook along with you. You can conveniently make payments with your credit card. It allows you to avoid frequent usage of ATMs and thus you are able to save on the ATM transaction fees. Just imagine losing your wallet with lots of cash and checkbooks. It can badly hit you. However, if you happen to lose your credit card, you simply have to report it to the concerned bank, who then issues you another credit card, charging you a nominal fee in the process.
Rewards and Cash-Back: As we are seeing, there are numerous benefits of using a credit card. Nowadays, most credit card companies offer rewards plans and cash-back. The concept is pretty simple and highly beneficial for credit card users. When you use your credit card to make purchases, you tend to accrue reward points towards various products and services. The reward points can be redeemed against goods and services, or you can even convert them into reward vouchers.
So, these rewards points serve as discounts or rebates which you can redeem later on while making new purchases. Moreover, rewards can come to you in the form of cash-back. Using your credit card, you can get cash back on everyday purchases, including groceries. Credit Card Companies usually offer 1-5% cash-back on your purchases. However, cash back offers can vary from one credit card Company to another. So, in a way your credit card makes you spend so that you earn (discounts and cash back) on your purchases.
Universal Acceptance: Credit Cards usually have a universal acceptance, and this is another very useful benefit attached with their usage. Credit Cards of most of the companies are usually accepted across various sectors and even in foreign countries. So, you can make all kind of purchases with your credit card. On this account, you do not face any limitations for making a purchase with your credit card. For example, it is always easy to make payments for your hotel accommodation with your credit card.
However, hotels do not readily accept payments with your debit card. Likewise, when you are travelling in a foreign land, merchants do not always accept payments with your debit card. On the contrary, you do not face any hiccups when you make payments with your credit card in a foreign land. With universal appeal of your credit card, you get the necessary ease and flexibility needed for making payments or for making any kind of purchases.
Build Your Credit Rating: Using your credit card wisely can help you to improve and build your credit rating. This is a major benefit of using a credit card because using a debit card or cash do not help for improving your credit score. So when you use your credit card responsibly you go onto build a positive credit history for yourself. Borrowers can trust you and offer you loan on a low interest rate. You go onto get favorable interest rate on your borrowings. Your loan period can be extended for a long time.
All-in-all, this results in providing you an opportunity to save hundreds or even thousands of dollars as interest on your loan. So you need to you use your credit card regularly. Moreover, you have to ensure that you use only a small portion of your credit limit (say 10% to 30% of your credit limit) and make sure that you are always paying your credit card bills on time (and in full). Doing this will go onto improve your credit rating.
Apart from the above benefits, there are several other benefits of using credit card(s). They come as expense tracking tool through which you get to track, monitor, and control your expenses. You get monthly statements of your credit card usage through which you can track the expenses you have made through your credit card. You get to know on what categories you are spending which further provides a mean to control your expenses if you are overspending on these categories.
Then there are many insurance benefits linked with your credit card. Usually, credit card companies offer product insurance, free rental car insurance, accident insurance and other kinds of insurance benefits, as well. Credit Cards also provide theft and fraud protection so that you can remain at peace even if your card is stolen or lost. Credit Card Companies also provide the facility of short-term loans to those users who are responsible in their credit card usage and pay their credit card bill timely and in full.
So, you see that there are actually numerous benefits of using a Credit Card. However, you need to come out as a responsible credit card user so as to realize the benefits of your credit card. For this, you have to use your credit limit wisely and should be prompt, regular and punctual in your credit card payments. Credit Card can be a helpful financial instrument only when you are a responsible credit card user.