5 Reasons You Need to Have a Credit Card

You might think credit cards are only important for boosting your credit score but there are a variety of ways a credit card can be beneficial in your financial life. A credit card used wisely can be a vital aspect to your overall personal finances.

Here are 5 reasons you need to have a credit card:

Protection

When you shop with a credit card, you have the back up support of the card provider if something should go wrong. Purchase protection differs from card to card but essentially most major card issuers will work with you to dispute a wrongful charge, inaccurate information, or a purchase gone wrong. You do not have the same protection with a debit card, check, or cash. Additionally, you are covered for the liability of fraudulent charges if someone accesses your card unlawfully. During the charge dispute investigation, you are not required to pay the money until the investigation has been completed.

Short-Term Loan

If you are anticipating money coming in, perhaps a windfall, tax refund, or work bonus, you can use a credit card like a personal loan. Most credit cards have a 22-30 day grace period where you don’t incur finance charges on what you purchase. Provided you allocate the cash you are to receive directly to your credit card bill, you can take advantages of deals, sales, and opportunities prior to having the actual cash. Again, this is only beneficial if you pay the balance in full before the end of the billing cycle.

Rebates/Rewards

With so much competition in the credit card arena, companies are always trying to outdo one another by offer bigger and better rewards programs. While it is true that overall rewards programs are being streamlined to save cash to the credit card companies, there are still many opportunities to earn free flights, free hotel stays, free merchandise, discounts, and even straight cash using the right rewards card. Simply by regularly using and paying on your credit card, you earn rewards and rebates with no additional work necessary.

Emergencies

Having at least one credit card for emergencies is a good practice for good financial health. In the event an unforeseen expense pops up, you won’t have to worry about finding cash to take care of the problem. Keep in mind, you need to consider what constitutes as a real emergency and stick to your own guidelines when it comes to making purchases on the card. You’ll want to make sure the maximum available credit is ready for you to use in the event your vehicle breaks down, your house needs repairs, or you need to pay for travel expenses due to a family emergency.

Services

There are some services that require a credit card to complete the transaction. Whether it is a car rental company or a hotel reservation desk, you may not be able to utilize some services without a major credit card number to be used as backup.

There are many credit cards on the market today and in order to make them work for you, you need to select the right card for your lifestyle and then use them responsibly. Consider the five reasons a credit card will serve you well and then consider the additional reasons a credit card would make sense for your life.