The benefits of using a credit card

Your credit card can steer you in the right direction for a great financial future.

11:17 28 September 2013

We typically think of spending on credit cards to be a negative thing, but that isn’t always the case. For many people it may be difficult to manage spending on credit and it’s true for those people that out-of-sight is out-of-mind until the credit card bill comes due.  In reality credit cards can be a beneficial tool to make life a little easier as long as you remember that it isn’t free money. You’re usually paying more for what you purchase than you would if you purchase with cash or cheque, but there are times when that is a minor setback in comparison to the potential benefits.

Here are some of the benefits of using your credit cards:

•    Flexibility—credit cards offer a lot of flexibility. You can travel the world, book hotel reservations, rent vehicles, and reserve other things as well just by giving your credit card number. There are even some online shopping sources that will only take credit cards, as well as some shops.

•    Protection—we might not always think of this factor when using credit cards, but there are a few layers of protection when we use the card. The credit card company acts as a mediator of sorts between us and the merchant. If something goes wrong and you don’t get an adequate response from the merchant you can dispute the charge. In addition to that protection, there is also protection from credit card fraud. Using your credit card means that you won’t be liable for any fraudulent purchases up to a certain amount.

•    Credit rating—using your credit card and maintaining a positive repayment history improves your credit score and can help you reach your future financial goals.