5 Reasons to Have a Credit Card

Some Americans are afraid of credit cards and worry about borrowing money that they will have to pay back at the end of every month. However, these concerns are overblown for many people. Credit cards are actually a safe, easy way to build credit and make everyday purchases much easier.

1. Ease of Use

One great reason to have a credit card is ease of use. Credit cards can be used to quickly make a host of purchases. The credit card company takes care of tracking these purchases and then sends the customer a bill at the end of the month. As long as a person pays off their bill on time, the tracking and ease of purchases can be quite helpful for the cardholder.

2. Financial Protection

Another reason to have a credit card is safety. Credit cards are much safer to use than any alternative purchasing method. Cash and checks can easily be lost or stolen with no recourse available for the victim. On the other hand, credit cards can often be replaced and allow you to have fraudulent purchases reversed for free. Debit cards have much higher liability limits, and losses are harder to recoup. This is because a debit card takes money immediately out of an individual’s account. Because credit card purchases are made on credit provided by the credit card company, fraudulent purchases end up defrauding the credit card company first — creating an incentive for them to resolve the issue quickly.

3. Credit Development

Yet another reason is building up credit. Credit cards are a safe, sometimes-free way to build up your credit score. A person can prove creditworthiness by consistently paying off their credit card on time. Higher credit scores mean that you can secure lower interest rates when you eventually want to borrow money for a car or house.

4. Large Purchases

Credit cards can also help facilitate large purchases. Most people cannot simply go to the bank and withdraw several thousand dollars for a television or car. With credit cards, you can make the purchase at any time and then pay back the money at your convenience. This process is even easier if a person wants to incur interest payments and carry their balance over a period of months.

5. Earning Rewards

Finally, credit cards can help you build up rewards that end up bringing in more money and products for you to use. Rewards programs vary substantially — some offer cash back that ends up being free money if an individual pays their bill in full and on time. Some rewards programs also offer discounted products or gift cards that a person can also enjoy, while some may award airline miles. Debit cards and cash purchases do not offer the same level of individual support.

Individuals who are prepared and confident about their spending should at least consider a credit card. Community banks can help guide individuals to the right credit cards and connect those cards easily to their accounts. When used properly, the right credit card can be the key to a person’s financial stability.