Payment methods, such as debit cards and cash, may appear to be a more convenient way to stick to a budget. But, credit cards, when used responsibly, can be beneficial to your financial well-being. Smart credit cardholders can earn money simply by using their cards!
Continue reading to find out how credit cards can help you in achieving your financial goals.
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Build Credit History
If you want to borrow money, you’ll need a credit score, which is based on your financial activity records. Your credit card history contributes to these scores. Credit card usage, unlike debit card usage, is reported to the credit bureaus that track credit scores.
Your credit score is greatly aided by a track record of timely payment of credit card balances. And the longer you use credit cards, the more your credit history will grow, boosting your credit score even further.
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Sign-up Bonuses
Many credit cards offer sign-up bonuses as a welcome gift. To get the bonus, you usually have to spend a certain amount (sometimes within a certain time period), so make sure you read the fine print.
For instance, the Chase Sapphire Preferred® Card is currently running a promotion that rewards you with 60,000 bonus points after spending $4,000 in the first three months. Plus, you can get up to $50 in grocery store statement credits.
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Cashback
When you use a cashback credit card to make a purchase, you receive a small amount of money back. The cash reward will range from 1% to 6% of your total purchase price. These bonuses can add up to a substantial bonus over time.
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Rewards Programs
Rewards programs are almost as many as credit cards. The key is to find a rewards program that fits your current spending habits or is affiliated with a retailer you already know.
Some examples of reward programs include, but are not limited to:
- Points-based systems You earn points based on your spending, and you can redeem them for gift cards or other rewards.
- Cards for frequent flyers. Every time you fly, you accumulate airline miles that you can use to get discounts on future flights. These cards may come with attractive sign-up bonuses.
- Travel rewards cards that offer “credit card miles,” which are similar to frequent flyer miles but still provide travel rewards.
- Reward points for common purchases such as dining out, gas, and groceries. This card is ideal for people who don’t travel much but still want to take full advantage of their card.
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Balance Transfer
You transfer your debt from one credit card to another when you do a balance transfer. Car loans and monthly installment payments may also be transferred to a balance transfer credit card. Of course, you’ll always have to pay what you owe.
However, transferring the debt to a card with a lower interest (or zero interest) rate would save you money in the long run. Balance transfers will also help you consolidate debt and simplify your life.
