Credit cards and the hidden benefits

Whether you want one or not you may find yourself with a credit card or two.

03:12 16 September 2013

Many people may consider credit cards to be a nuisance, or something that can harm your credit rating rather than a tool to be used toward improving financial situations. There are actually beneficial reasons someone might prefer to use credit cards, or may simply need to use credit cards for hotel reservations, flights, and vehicle rentals. Here are a few reasons to choose credit cards as a method of payment:

• Protection for large purchases—if you are able to purchase larger items such as vehicles or other things through credit cards allows you to have protection if something happens to a product or it isn’t as advertised.

 

• Required method of payment—there are some types of transactions which require the use of a credit card, such as reserving a room in a hotel, obtaining a flight ticket and renting a vehicle. There are also online websites that are better to use a credit card so you receive the protection on the purchase.

 

• Cash advances—most of the time the advice is to never take a cash advance, but if you’re in a financial crisis and you need money it may actually make more financial sense to take a cash advance than it would to consider another option such as a payday loan. Always compare your options and find out the interest rate before taking out a cash advance though so you can be prepared for the increase in your monthly payment.

 

• Credit scores—one aspect of credit cards that we frequently overlook is the fact that you need to have one in order to help build, or even rebuild your credit score. Banks like to see regular, on-time payments and how you spend your money. Credit cards provide the most ideal opportunity for banks to get a feeling for your spending habits.