Credit cards are one of the most useful financial tools available to consumers. Thoroughly understanding how they work and what the benefits are will help you decide if getting a credit card is right for you. If you’ve decided that it would be advantageous to get a card, there are multiple reasons why this should be done sooner rather than later. Let’s explore some of those reasons.
Building Credit History
If you want to take out loans or apply for a mortgage in the future, a credit history must be present. The only way to build a credit history is by using a credit card. If you don’t have one and try to apply for loans or mortgages, lenders will not look favorably on you. Also, credit-building cards typically have low-interest rates and can help you improve your credit score. This will lead to better interest rates and terms when it comes time for you to take out a loan.
Your credit history is especially important for young people who want to buy a car, take out a loan, or buy a house. While it’s true that you may not need credit until you’re ready to finance any of these purchases, the only way to build your credit history is by using a credit card before then.
One of the ways lenders can check your credit score is by looking at how long you’ve had an account open with your tracked financial behavior over time. If you haven’t had an account open recently enough, there won’t be much data for them to review and this will impact whether or not they approve you or what interest rates and terms they offer.
Tracking Your Spending
A majority of the purchases you make throughout the month are done with a credit card. You will never keep track of your spending if you don’t use one. Credit cards offer detailed receipts, so it’s easy to see where all your money went at the end of each billing cycle. If you’re struggling to save money for emergencies or retirement, using a credit card will help you budget since every purchase is recorded.
Credit cards make purchasing easier in many ways. First of all, there is no need for you to keep track of your spending in order to make sure you have enough cash or funds available to pay off your balance when it is due. When the bill arrives each month, the balance will be automatically transferred from your account.
Second, by giving you a way to easily budget and track your spending, credit cards help consumers spend wisely and avoid overspending! Using a card responsibly and paying bills on time each month, can ultimately lead to improved financial stability.
If you’ve accrued too much debt on another account, transferring that balance over to a new credit card can be extremely useful. Since most major credit cards offer 0% introductory APRs for balance transfers (yours probably does), this can be a great way to get out of debt quickly. The process of transferring your balance will typically take only about three weeks. And while the introductory rate is very useful, you should always remember that it will go up to a standard APR when the intro period expires.
Protect Against Fraud
One of the worst things that can happen to a credit card holder is theft or fraud. However, this is something you are protected against if you have a credit card. Some cards will even offer rewards for reporting suspicious activity which could help earn extra money. Overall, the best reason to get a credit card is that they provide security and protection against theft if they are used responsibly. Also, having a credit card makes it harder for you to be robbed while carrying cash increases that risk.
Now that you know about some of the top reasons for getting a credit card, take action today! Credit cards are often associated with increased debt and risky spending practices but there are many benefits to having one as well. Having a credit card can help you get out of debt, improve your credit score, and manage your spending without the need to carry cash.
If you’ve never had a credit card before, now’s the perfect time to apply for one! Take control of your finances today by applying online or visiting your local bank branch to sign up for a new account. We hope this article helped you understand why you need a credit card. Have fun spending!