Do you want to sign up for a credit card but you are unsure if it is beneficial to you? Well reading this website will let you know what you will gain as a credit card holder.
Almost every adult, sometimes even students, own a credit card. It is a convenient way to make purchases. It will allow you to buy the things that you need even if you do not have the cash at hand or there is no ATM around to make a withdrawal.
Applying for a credit card for the first time can be scary but it will mark the beginning of your life as a financial adult. You will learn and achieve so much in your financial life – but only if you use it properly.
Here are 6 reasons why you want to sign up for a credit card.
1. To build up your credit history.
If you want to be smart about your credit, your main reason to get a credit card should be to build up your credit history. This history will comprise the data on your credit report and will eventually affect your credit score.
But why is this important? Your credit score will be the basis of future lenders in determining if you are responsible and can be trusted when it comes to borrowing money. If you have a high credit score, you will get lower interest rates because they know that you will not bail out on them. This will prove to be very useful when it is time for you to get a car loan or a home loan.
Now your credit card will help you build up your credit history by allowing you to use credit for purchases. It is very convenient because you only apply for it once. As long as you do not reach your credit limit, you can keep on buying through credit without the need to reapply.
When you pay for your dues on time, it will reflect well on your credit report and that will lead to a good credit score.
2. To practice credit management.
This goes hand in hand with the first benefit. If you want to have a good credit history, you will be forced to practice credit management. When you use your credit card, you will learn how to pay your dues on time. You will understand what can interest rate is and how it will affect your credit balance.
All of these are necessary for you to learn so you can avoid putting yourself through debt. You should know that if you sign up for a credit card, you will always be in danger of acquiring too much debt. To avoid that, you will be forced to learn credit management.
Learning how to manage your credit card will also help you get ready for bigger loans in the future (e.g. home loans).
3. To have financial security in times of emergencies.
Another benefit of owning a credit card is to have additional financial security – especially in times of emergencies. Even if you have an emergency fund, there are situations that are so severe that it can quickly deplete your cash reserve.
That being said, you want to have a credit card on hand to help pay for the things that your emergency fund cannot. You do not have to apply for a new loan – it will be there for you to use when you need it the most.
4. To protect your cash from theft.
The convenience of a credit card is also manifested in your ability to make cashless purchases. You do not have to carry cash with you when you go to your shopping errands. You can simply use your card to make the purchase.
This protects your cash from theft. When cash is taken, there is a very slim chance that you will get it back. If your credit card is stolen, you can simply call the issuer and let them know that your card was stolen. They can either freeze it or put up a fraud alert so the thief will not be able to use the card and thus complete the crime against you.
5. To take advantage of rewards.
Other people sign up for a free credit card because they want to take advantage of the rewards. There are a lot of credit card companies and retail establishments that offer perks and privileges to credit card holders. Wouldn’t it be great to make a purchase and get free items for it?
If you match your credit card with your spending lifestyle, you might be able to take advantage of these freebies and rewards. It will help you save a lot of money in the process.
6. To avail of financial purchases that would be difficult to achieve in cash.
Lastly, there are financial purchases that you can make if you are a card holder. For instance, rental car companies usually require a credit card before you can lease their vehicle. That is their security that you will not run off with their vehicle. This is also something that hotels will ask from you.
If you sign up for a credit card, you will find a lot of opportunities will be open for you – especially when you are travelling to other places. Of course, you have to make sure that you can practice the right purchase and payment behavior to ensure that your credit card balance will always be in check.