Credit cards can be a very controversial topic, but there are some positive reasons for having a credit card. Today I will list out my top reasons for having a credit card:
1) Large Sign-Up Bonuses
It is no secret that there are quite a few credit cards out there that have some lucrative sign-up bonuses that makes it so attractive. These large sign-up bonuses can go a long way if you leverage the rewards effectively.
2) Rewards / Cash Back
Earning points is one of the top reasons why I have a credit card because I like redeeming my points for free stuff. If you are unhappy with loyalty programs, you can earn fixed income rewards, such as cash back. It is fixed because you know exactly what you are getting back. Generally inflation is somewhere between 2-3%. Furthermore, credit card companies already charge retailers a fee so that they can accept credit cards. Which means that retailers already increase the prices of their products and services to offset this cost. Therefore, if you are not getting any sort of return on your credit card, that you are actually losing out.
3) Help Pay for Big Ticket Items
I am not a fan of carrying large amounts of cash around with me. And it is not like we can pay for everything with cheques. Therefore, in those cases, credit cards are actually for convenience.
4) Fraud and Theft Protection
If you carry cash and get it stolen, do you not have any sort of insurance protection for that cash. But if your credit card is stolen, you have some fraud protection by reporting the incident and having your credit card shut down to prevent further usage. Furthermore, you will be reimbursed for fraudulent transactions once it has been reported within the time limit, generally within 30 days of the transaction.
5) Internet Purchases
I am a fan of making purchases online, because many purchases are cheaper online, so having a credit card makes it easier. There are other means that you can use to pay for things online, such as PayPal, but I find credit cards pretty convenient.
6) Grace Period
Once you use your credit card, you do not have to pay off your bill immediately. You have until your cycle closes, along with a few additional weeks before any interest or penalties are triggered, therefore you can retain your money until the amounts are actually do.
Some credit cards offer additional insurance and warranty protection for your purchases. I generally like having most of my travel insurance covered by my credit cards. Some people also like the extended warranty protection on products that you buy.
8) Building Credit Score
At some point in time, for the most of us, we will need to apply for a loan. When we apply for a loan, we will need a good credit score to qualify for better interest rates and to qualify for a higher loan if need be. Having a credit card helps us build our credit history so that our credit score can slowly move upwards when we can prove to the credit bureau that we can manage our credit responsibly. If we never have any credit to manage, our credit score cannot really increase.