Three Reasons to Pay with a Credit Card

Credit cards aren’t evil and they don’t automatically trap the people that use them under a mountain of debt. When used properly, there are many financial advantages to using credit cards to pay for day-to-day expenses. Here are three of the best reasons to prefer plastic:

Track Your Spending

Credit cards offer robust balance and purchase monitoring tools that appeal to many consumers because they’re easier to use than the traditional check ledger and update automatically and in real-time, in some cases. Online banking and mobile apps that allow you to pay with your phone, monitor your balance, and categorize your spending are all very helpful budgeting tools and can help prevent the overspending and debt accumulation that can result from overusing credit cards.

Earn Rewards

By choosing your credit cards carefully, you can earn rewards for using them. Many popular cards offer cash back or airline miles as rewards, so be sure to investigate which card is right for you and your spending habits. One important factor to consider is the APR. This percentage is the amount of interest that will be charged on the card balance. If you are not in the habit of paying off your credit card every month, be sure to select a card with a low APR. Additionally, check to see if the card has annual fees and then evaluate whether the potential rewards are worth paying that fee (if there is one).

Build Your Credit

The length of your credit history is a significant factor in your credit score, so keeping an old credit card open is a great way to boost your score. To maximize this benefit, keep your oldest cards active, even if you don’t use them very often. Without a solid credit history, you may find it difficult to rent or buy a home, buy a car or make any other large purchase that requires financing. Another important factor in building your credit is your credit-to-debt ratio, which will shrink if you close a card.

The most important thing to remember is to use the credit available to you responsibly. Carefully consider your purchases, and never spend more than you can afford. Always pay your credit card bills on time and strive to pay off your complete balance each month. If you have questions about what type of credit card is best for you, ask your bank what kind of credit cards they offer. Credit card accounts can range from cash-back offers, to co-signed cards, to cards that donate money to local charities. It all depends on what you’re looking for.