3 Important Reasons to Consider Having a Credit Card

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(Newswire.net — September 12, 2021) –Credit cards often build a bad reputation for having high-interest rates and harsh penalties. However, despite the consequences of a missed due date, credit cards have several benefits that allow for the careful establishment of a person’s financial record and responsible financial planning. 

1- Establishing and Building Credit 

One of the biggest benefits of having a credit card is its role in establishing and building credit. The credit helps banks and lenders to determine the amount of money they’re willing to lend a person, as well as the interest rate they’re willing to agree on. The better a person’s credit, the better deal they’re likely to get when searching for a loan.

If a person has bad credit or no credit, the banks won’t want to give them a loan. If they do give them a loan, it’s likely to be at a high-interest rate. This makes purchasing a house, car, or other large items very difficult!

In order to establish credit, lenders need to see that a person is trustworthy in making timely payments. These payments may be to utility companies, rental property owners, or most often, credit cards. A credit card helps to establish and boost credit if payments are made on time.

2- Access to Funds

A credit card also gives its owner access to funds. In times when money is tight, a credit card gives the user an extra opportunity to make purchases and payments, and then pay them back later.

Credit card companies typically determine a card holder’s spending limit based on a variety of factors. A person who has a good credit history is more likely to get a higher amount of funds available to them. Those with no credit history or poor credit history should expect to have a lower limit.

These funds can help individuals get out of tight situations, especially when they’re short on cash for necessary expenses or repairs. As long as the balance is paid back by the due date.

3- Chance for Rewards

Many credit card companies offer incentives or rewards for using their card. Many cards have attractive cashback rewards. Some credit card companies even allow the card users to pick where they want their biggest bonuses or rewards depending on what they feel they use the most often. For example, a company may offer a 2% cashback reward on all purchases, but a 5% cashback reward in the category of gas, food, hotels, or car rentals.

These rewards put more money in the hands of the user. It allows them to earn cash or points for their purchases. Especially if the use is timely in paying off their credit card balance, this can be an extremely attractive reason to use a credit card.

Those who are looking for extra funds on the spot may consider credit cards as a plausible option. They not only help their user establish and build their credit score, but they also offer attractive rewards such as cashback. Although credit cards have historically received a bad reputation for their high-interest rates and penalties, there are many important financial benefits to using a credit card as well.