It’s smart to be cautious with a credit card. No one wants to end up in debt or over-extended. But when used with thought and care, there are often instances when it’s to your benefit to pay with credit. Here are five times when it’s a good idea to reach for your plastic, instead of cash or a debit card.
The Perks
If you have recurring monthly expenses, then reach for your credit card in order to reap the rewards. This is a safe bet if you know you’ll pay the expenses in-full at the end of the month. Gas, groceries, public transportation and even your cell phone can all lead to travel rewards, rewards points, or cash-back.
Improving or Building Credit
All credit companies are required to report your payment performance to the three credit bureaus every single month. Consistent on-time payments will help you build or improve your credit rating, so buying a car, home, or taking out a loan will be much easier and affordable later down the line. Keep in mind, it can go the other direction as well. Late or missed payments are also reported monthly, so bad credit behavior can also cause your credit score to quickly plummet.
Stretch Out a Big Expense
Sometimes big expenses come up that can’t be covered with the cash we have on-hand. Sometime our cars break down, homes need repair, or a large medical bill can catch us off-guard. Having a well-funded emergency savings account should be your first defense against surprise expenses, but sometimes that’s just not enough. In these situations, a low-interest credit card can be a valuable option. Just be sure you only charge the minimum you need to cover the expense and make an action plan about how you’ll pay it back as soon as possible. The longer you take to pay it back, the more interest you’ll spend in the long run.
The Protection
Your credit card probably offers you more safety features and insurance benefits than you realize. Many credit cards come with fraud protection, travel insurance, and extended warranties. For example, if fraudulent charges happen to appear because your credit card was hacked, then the credit card company will freeze the account to prevent any further damage and they’ll dispute the fake charges. In the meantime, your checking and savings account have remained safe and untouched.
Flexibility While Traveling
Another great benefit of using credit cards while traveling is you get extra perks and more protection. Many credit cards come with insurance for lost luggage, rental car insurance, and even discounts at certain hotels. It also means your money won’t be frozen if a restaurant or hotel places a hold on your card for expected fees in the future.
Ready to find the right credit card for your lifestyle? Visit our website or call a Member Specialist today at 800-422-5852. Insured by NCUA.
