Beneficial Credit Card Uses
Personal finance professionals spend a lot of their time trying to persuade individuals not to use credit and debit cards for valid cause. A lot of us recklessly make use of credit cards and end with the position of being in debt. Contrary to what many believe, when you utilize the credit card responsibly, it’s better to make payments with a credit card rather than the debit card and limit cash-based transactions to an absolute minimum. Let’s look at why your trusted credit card is ahead, the best ways to use credit cards, and applying techniques.
1. On Step Initial Bonuses
There’s nothing better than the first bonus offer you get when applying for your first credit card. Most of the time, people who have excellent credit or outstanding credit can be accepted for a credit card that provides rewards of up to $150 (sometimes significantly more) in exchange for the required amount (anywhere between $500 and hundreds of thousands) within the first few months after opening the account.
Some cards offer rewards points, miles, or rewards that are exchanged for gift cards, travel or merchandise, a statement credit, or even checks (more about them below). Like if you get JCPenney credit card approval score, you will receive bonus points in it to avail many offers. However, a traditional debit card with a bank checking account typically provides no bonus on the first day or the chance to earn rewards regularly.
2. Cash Back
Cash back credit cards were first widely used in the United States by Discover, and the idea was straightforward use the card to receive one percent of your purchases paid back in the form of cash back. In the present, the idea has evolved and matured. Nowadays, some credit cards provide up to 2%, 3%, or even 6% cashback on certain purchases, but these lucrative deals have annual or quarterly spending limits.
The most effective cashback cards charge only a small interest and fees but also offer a higher reward rate. Certain cards, such as the Fidelity Rewards Card, provide the highest 2% in money back reward on all purchases; however, you have to deposit your money directly into a Fidelity money market account.
3. Rewards Points
Credit cards are designed for cardholders to earn points per dollar spent. Many reward cards offer bonus points on certain categories of expenditure like food, restaurants, and gas. Once certain thresholds of earnings are reached, the points can be exchanged for transportation, gift cards from restaurants and retailers, or to purchase merchandise via the credit card company’s Rewards portal on the internet. Your rewards options with credit cards are nearly endless.
Choose a co-branded credit card by hotels, a clothing retailer, or even a non-profit like AARP, which allows you to utilize your daily spending to earn rewarding rewards throughout the day and night. The most important thing is to select the right card to fit your spending habits. Altering your spending habits to go to a particular card could cause problems.
However, if you already spend money regularly with a specific retailer or are a fan of an establishment and restaurant, why not get the card that can encourage the continued use of that business by offering higher rewards, discounts, and other additional benefits?
4. Frequent-Flyer Miles
This offer predates nearly all other benefits. In the early 1980s, American Airlines began offering customers a unique method of earning frequent-flyer mileage even though they were not flying through a collaboration with credit card giant Citibank.
Today, almost all international and domestic airlines offer at minimum one credit card that is offered through a similar partnership with the major issuers of credit cards. Cardholders typically get miles at the cost of one mile for every dollar spent on net purchases or, in some cases, one mile for every two dollars for cards with lower limits with no annual fees. The amount of value of this bonus is contingent on the type of ticket you can purchase using the miles or points.
Frequent flyer cards become more useful through their mileage-based welcome bonus. These can often make you 50-100 percent of the way to an award trip after you have met the card’s minimum spending requirements.
Credit card payments help you avoid the losses caused by fraud. If your debit card is stolen, the cash is taken from your account immediately. The legitimate expenses you’ve made online or by mail might bounce, resulting in fees for insufficient funds, which can affect your credit score. Although it’s not your fault of you, late or unpaid payments could affect the value of your rating on credit. It could take a while before fraudulent charges are reversed and funds restored to your account, as the bank examines.
However, when your card has been used to commit fraud, there is no loss of money. You just inform the credit card company about the fraud, and you don’t have to make payments for transactions you did not make until your credit card provider deals with the issue. Credit card networks such as Visa and MasterCard offer no liability protection for purchases that are not authorized as a way of encouraging the use of their cards instead of checks or cash.
Credit card companies may also assist in resolving refund disputes in cases where consumers cannot deal with the dispute between merchants by themselves.
6. Keeping Vendors Honest
Imagine you have hired an installer to set the flooring for your entranceway. The workers work all weekend cutting and measuring, then grouting, setting the tiles and spacers before setting the entire thing. Then they cost customers $4,000 in compensation for their labor.
You take money out of your savings account and write an amount. But what happens after 72 hours if the tile begins to move and the grout isn’t set? Your entrance is now messy, and that vein on your forehead isn’t going to stop. You could raise the problem with your state licensing authority, but the process could take months, and the contractor will still have the money. So, if you have the option, purchase a large-ticket item such as this by credit card.
The issuer is positioned to stop fraud from its partners, and if there’s a problem, they will attempt to solve the issue. Additionally, if contest charges, your issuer will withhold the money from the tile setter. In addition to receiving your money back, you could also get assistance to find an alternative vendor.
7. Grace Period
If you make a debit card purchase, your cash disappears immediately. Purchasing using a credit card remains in your account until you pay the credit card charge. Saving your money for this time may prove beneficial for two reasons. The first is that the amount of cash, no matter how small, can help you save money.
By delaying the payment, you can make the purchase less expensive than it would be otherwise. Additionally, when you pay using a credit card instead of your cash, debit card, or check, money will remain in your banking account; when you pay for your credit card using an account that earns interest and earns interest in your grace-time period. The additional cash eventually accumulates into a significant amount. In addition, if you regularly use a credit card to pay, you don’t need to monitor the bank account balance similarly.
A majority of credit cards come with several consumer protections that most people do not even know they have, for example, rental car insurance (though usually in addition to your auto insurance), travel insurance as well as product warranties that could be more than what the manufacturers guarantee.
9. Universal Acceptance
Certain purchases aren’t easy using a debit card. If you’re looking to rent a vehicle and stay in a hotel room, you’ll probably be able to do it easily when you’ve got credit cards. Hotels and rental car companies require customers to pay using credit cards since it is easier to charge customers for any damages they cause to their room or vehicle. The reason behind this is if you don’t have prepaid the rental or hotel stay, and the vendor does not know the total amount of the transaction.
Therefore, the seller must block out an amount from the credit line available to guard against any possible charges they didn’t expect to incur. If you purchase the items listed above using a credit card, The Company might require several hundreds of dollars on the account. Also, when traveling to a different country, the merchants will not always accept your debit card, even with a prominent bank logo.