Statistics show that more than 80% of the households in the US have at least one credit card. This form of payment has many advantages. Credit cards can charge high interest and have exorbitant fees, but this is not a major problem for those who use their cards wisely and pay their balance on time. Credit card users benefit from membership rewards, air miles, extended warranties, cash back and discounts on holidays. Anything from travel insurance to price protection and spending vouchers are worth investigating.
Credit cards are convenient and easy to use. They allow you to purchase products or services whenever and wherever you want. As long as you have a MasterCard, Visa, American Express, or Discover Card in your wallet, you won't have to worry about running out of cash. Although debit cards have gained popularity in the last years, credit cards are still a preferred choice among customers. Despite their similar look, debit cards lack many of the features that come with a credit card. Debit cards often have spending limits, which could prevent you from buying more expensive products. Customers can use their debit cards as credit cards if they sign for a purchase instead of using their PIN number. Those who choose this option are responsible for paying extra fees.
When you buy something with a credit card, you get certain legal rights that debit cards do not provide. Prepaid debit cards are the most popular alternatives to debit cards linked to your bank account. These low-limit cards are ideal for those with bad credit, as well as for those who want to avoid overspending. Prepaid debit cards are preloaded with funds from the amount of money deposited into the account.
A credit card can help you manage your expenses more efficiently. Your bill acts as a master receipt that displays the products and services purchased. Some credit cards, such as those from American Express, send annual summaries of your spending after they categorize the purchases. This allows credit card users to see how much money they have spent on dining, groceries, entertainment, etc. A credit card can be one of the best tools in tracking your expenses. Most customers who use credit cards have access to an online banking account featuring rate calculators, monthly statements, transaction reports, and personal finance tracking software.
Using a credit card responsibly can help you build up your credit score. Customers with a good credit score get lower interest rates on loans such as a home mortgage or a car purchase. Credit reference agencies record data supplied by financial organizations, including late payments. Lenders will typically consult at least one of three credit agencies before deciding whether to lend to a customer. Having a high credit score proves how responsible you are and that you pay your bills on time. If you have a poor credit rating, you may be denied for future credit or pay higher interest rates. Maintaining a good credit history is important not only when applying for credit cards, but also when applying for certain jobs or loans.
Another benefit of using credit cards is that you will be given a grace period in the form of the float if you are unable to pay your bill each month. This means that you are allowed to extend the amount of time you have before the credit has to be paid in full. When you float a credit card balance, you get a break of up to one month during which the lender does not charge interest on the goods purchased. This is an excellent option for those who don’t want to pay high interest rates.
To attract new customers, lenders must pay between $50 and $150 for each account. If you want to pay lower annual fees and annual percentage rates, talk with your lender. Financial groups are generally open to negotiation. Don't be afraid to ask. The competition is tight between credit card companies, so make sure you use this situation to your own advantage. Your lenders would do anything to keep you from leaving them for a competitor.
Credit cards offer greater consumer protection than any other form of payment. If something you have bought is lost, damaged, or stolen, the credit card company can step in to help. Both the card issuer and your credit card statement can prove that you have made a purchase even if the original receipt is lost or stolen. Using your credit card to pay for a certain product or service gives you a high degree of protection that you won't get when paying with cash or ATM cards. Most credit card issuers provide purchase protection insurance for free. Under certain circumstances, credit cards allow you to withhold payment for products that prove defective.
Credit card users benefit from ID fraud protection, freebies, special discounts and more. Prying with your credit card gives you a degree of theft protection. If your card is stolen, contact your credit card issuer as soon as possible. Fraud is one of the biggest concerns in the industry. Most companies will make everything possible to resolve theft issues and get your money back. In most cases you will receive a replacement credit card and cash.
If you report the theft in a timely manner, you will only be required to pay back the first $50 of the thief's total expenses. Credit card companies typically offer zero liability, which means that you will never be liable for unauthorized charges. Make sure you report any fraudulent charges to your financial institution before you receive the next statement. Zero liability applies to purchases made online, in-store, or over the phone.