Choosing plastic over cash comes with a variety of advantages for users as it is a convenient financial tool to finance everyday purchases and payments. Credit cards can also be used for big-ticket purchases if the available credit limit allows. Many people think that getting a credit card is the best way to get financial independence in daily life. But getting a card also comes with a huge responsibility. If a user doesn’t use this shiny plastic wisely, he/she can end up in serious financial trouble.
The advantages of a credit card can only be enjoyed when used wisely. In this blog post, we are about to elucidate how first-time users can benefit from credit cards and what should be done to avoid building credit card debt.
There is nothing more enticing than getting free money by signing up for a new credit card. Some credit card companies offer sign-up bonuses worth $150 or more to users with excellent credit scores. A user needs to use his new card for a given amount in a particular period of time to claim the sign-up bonus. The sign-up or one-time bonus can be redeemed for a variety of transactions such as travel, gas, groceries, and daily essentials. One should compare the best credit card offers available and choose the right one with a bigger sign-up bonus. Also, make sure to go through all the terms and conditions to avail the bonus without spending much and building debt.
Cashback is another enticing benefit of using credit cards for everyday payments and purchases. Some credit card providers offer 1%-3% cash back on their purchases when they use a card for a given amount. Such offers are usually introduced on a quarterly or annual spending basis. The best cash-back credit cards are those that offer higher percentage of cash back to first-time users and charge as lower interest and fees as possible. Some cards also offer attractive cash back on different spending categories.
Free Rewards Points
Credit cards are designed to allow users to obtain reward points whenever they swipe the card for payment or purchase. Some cards also offer bonus points when a card is used for particular categories like travel, groceries, air ticket reservation, restaurants etc. When a user reaches a particular threshold, he can redeem those rewards for a variety of things including restaurants, gift cards, travel expenses, and more. Reading the fine print carefully is always recommended by experts to earn and redeem reward points effectively without overspending and building debt.
Payment Safety & Protection
Using credit cards helps consumers prevent losses and fraud. When a debit card is used for payment, the money is deducted from the account immediately. But credit card transactions are safe and secure as it is a line of credit you use for payments, not your bank account. Furthermore, some credit cards also offer purchase protection features to help you get a replacement or refund if ordered products are found damaged or not the same as ordered. This helps first-time users save their money when ordered products are not delivered or are damaged.
Universal acceptance is one of the great financial benefits credit cards offer. When you are traveling abroad and want to book a taxi or hotel room, you can use your credit card for payments. This eliminates the need for currency exchange issues to save both time and effort of travelers. Not only this, consumers can also use credit cards for overseas online payments and purchases as the card provider automatically exchanges the transaction amount into local currency.
Effective Expense Tracking
Thanks to monthly statements and quick transaction history, consumers can track their personal expenses more effectively than ever before. A monthly statement comes with all important transaction details to help credit card users track their expenses and spending habits easily.
Building Credit Score
If you want to improve or build good credit, getting a new credit card is one of the best ways you can adopt. When you use a credit card responsibly and pay off your balance in full every month, this helps improve your personal credit score. However, a first-time user should apply for a credit card that reports payment history to major credit bureaus. Right after building good credit score, you can easily qualify for personal loans at better payment terms and lower interest rates.