As the 2021 train grinds to a halt, this should probably be the best time for you to review where you stand financially to see what has worked for you and what hasn’t. And with upending spending patterns being just one of the main effects of the COVID-19 pandemic, you will want to pay even closer attention to your financial plans.
When it comes to ensuring your financial comfort, one of the solutions that you can’t go wrong with is a credit card. After all, there are so many benefits to it that it would be near impossible not to have one.
Here are just some of the benefits:
1. Money back on purchase
Once you make a purchase with your credit card and settle your bill, some of the best credit cards will give you as much as 6% cashback for selected purchases. Keep in mind, however, that to get such high rates, quarterly or annual spending caps are involved.
While most cards offer a lower rate of about 1% or slightly higher, there are quite a number of cards that give better deals. You can always compare credit cards so that you can select the ones that have minimal fees and interest coupled with a higher rate for the cashback rewards.
At MoneySmart, we have the right tools that you need when it comes to comparing credit cards so that you can make an informed decision.
2. Credit card as a safety net
In the event that you need to purchase an item and have no cash on hand, your credit card is your security blanket. That way, you can rest assured that you can buy the items you need with your credit card and pay the balance off at a future date. While you may not be able to carry these purchases beyond the billing date, as long as you don’t overspend and make repayment arrangements on time, this is still an essential service that you can enjoy.
3. Building your credit
Having a credit card is an important part of your financial record. In fact, this will have a big impact on the kind of financial products that potential lenders will present you with. For instance, those who have been able to maintain a steady and punctual repayment history will often be offered lower interest rates for loans and other facilities. As such, it is important to build and maintain a good credit score.
4. Protection against lost or stolen cards
If you ever lose your card due to theft, chances are that the bank will put a hold on it. That way, no one can use it once you have reported its loss. Of course, this does not always mean that you will not be liable for any of the transactions carried out in an unlikely event like this. Rather, it is just a protective measure to ensure that no further losses are incurred on your part.
5. Universal acceptance
Credit cards are accepted almost everywhere, unlike debit cards. That way, you don’t have to worry about whether or not you can make a purchase with your card. With a credit card, you will have a much easier time when it comes to making purchases at many different stores and merchants.
6. Reward points
There are some credit cards that will allow you to earn points for every dollar you spend. These can be redeemed after a certain period of time for things such as travel, merchandise, gift cards, and more. So while the actual value of these rewards may seem small, paying attention to them is crucial since they can add up over time if you use your card regularly.
7. Emergency funds
Having a credit card on hand means that you can use it as emergency funds, especially if you lose your job and cannot find another one quickly. By having an emergency fund with you, you can rest assured that there is no reason to panic and borrow money from friends or family members just so that you can have access to some amount of cash.
8. Enjoy extra convenience
You can use your credit card to make purchases online, directly from your phone, or anywhere else. That way, you don’t have to carry around cash everywhere you go in order to make a purchase or two. Moreover, because there are no additional transaction fees for making payments online, the convenience factor is certainly something worth considering.
Credit cards are an important part of your financial life. They come with lots of benefits for you to enjoy, but they also carry risks that you should be aware of. That’s why it’s important that you take your time to compare credit cards so that you can find the best, while also making sure to use your credit cards responsibly.