When it comes to the topic of money & personal finance, credit cards are often talked about at length. To say they divide opinion would be an understatement. You have people from both corners shouting about how good and bad they are with absolute confidence that they’re right. While it’s good to look at the pros and cons of something, too much shouting can cause confusion and lead people to have a blurred view on that topic.

As far as credit cards are concerned, there are many people out there that think they’re a bad thing. Or, more accurately, they’re a little bit afraid at the thought of having a credit card. I usually find this is because the bad experiences people have with credit cards are more likely to be reported and spoken about than the good ones. However, there is plenty of evidence to suggest that a credit card is excellent for your personal finances. This isn’t just a matter of opinion, there are plenty of facts to back this up to and prove that getting a credit card is a great idea.

So, that’s what we’re going to look at in this article today. I’ll start by presenting some of the top reasons to get a credit card, and then I’ll finish by touching upon why I think you might be scared of getting one. This should hopefully bring you a more balanced view of credit cards, looking at things from both sides of the argument, so you truly know what they are and how they help you.

Top Reasons To Get A Credit Card

Rewards Schemes

Arguably the main thing that attracts people to credit cards is the fact you can earn rewards for using them. These rewards often fall under the category of a points scheme where you earn points for each dollar you spend on your card. The points can be collected, and redeemed, providing you with discounts on certain products, allowing you to buy things for free, or even earn cash back. This essentially means that you get rewarded by just spending money as you normally would. No rule states you have to go out and spend loads every month to qualify for points, you literally earn them with every dollar you spend.

It just provides you with better value for every purchase you make because you get something back for the money you spend. If you used a debit card or cash for the same purchase, then you don’t get any points that contribute towards future rewards. The rewards themselves can be so beneficial and help you save lots of money on big purchases. Did you know that Best Buy has a credit card now and that you can earn reward points to gain reward certificates to redeem in-store? Theoretically, this means you could use that credit card anywhere, gain loads of points, and redeem them to save hundreds, maybe even thousands, of dollars on electronics! Other retailers are following suit, and then you have regular credit card companies that work with different brands to grant you discounts and let you redeem your points with them.

In short; reward schemes make a credit card more valuable than your little old debit card and help give you something extra when you spend money.

Build Your Credit Score

You should all be aware that a healthy credit score is essential for anyone making their way through life. When you get to the point in your life where you need to make big purchases – like buying a new car or a house – you may need to borrow money. Mortgage loans for homes are highly common, and your application will only be granted if you have a good enough credit score.

Well, one of the best and easiest ways to build your credit score is by using a credit card. This card can help prove that you’re a worthy lender and gradually builds your score as you use it and pay your bill on time. That’s the key thing here; you need to pay your bill on time and not end up in credit card debt. Otherwise, your score will go in the opposite direction!

It’s highly suggested that young adults try and get a credit card from a relatively early age and use it responsibly. This will help improve your score and allow you to borrow money when you need it most.

Insurance On Multiple Things

It’s a little-known fact that many credit cards come with insurance for the owners. A lot of the purchases you make are insured and protected by warranty should something go wrong with them. The most common type of insurance protection that most credit card companies provide is travel insurance. So, if you pay for flights using your credit card, you’re automatically protected if they’re cancelled, delayed, or something else happens that means you lose money.

This is an excellent feature to have on a card, and it’s not something you get from debit cards. As a result, you can argue that using your credit card grants you more protection and security when spending lots of money. Plus, if you’re reading this from another country, your government might even have laws that mean regular purchases are protected too.

Air Miles

Finally, we’ll end with a short point about credit cards and air miles. This is kind of like a reward scheme, but it often runs alongside a normal points system too. Essentially, the more you use your card, the more ‘air miles’ you rack up. This is great for frequent fliers as you can redeem your air miles to pay for future flights.

Again, just another little example of the benefits you can get out of having a credit card!

Why Might A Credit Card Scare You?

When you see all the good reasons to get a credit card, it can seem strange to think they’re often cast aside and deemed a bad thing. But, if we dive deeper into things, it becomes easy to spot one main common reason a credit card scares you.

Debt.

Ah yes, credit card debt. It’s one of the most common forms of debt, which is why these cards scare a lot of people. I think a common thought is that a credit card automatically equals debt because you borrow money. In reality, this is far from true.

There are loads of people that end up in serious debt, but that’s because they misuse their cards. If you use yours responsibly, then it will never be an issue. Credit card companies set a credit limit on your card, which is the maximum amount you spend every month. Often, they give you some options to choose from depending on your credit score. To be safe, you could opt for the lowest option possible. Loads of people make the mistake of asking for a very high credit limit, which makes them think they have access to loads of money. But, if you can’t pay your bill at the end of the month, then you’re screwed.

Hang on, wait, here comes the lovely credit card provider offering you a way out in the form of a minimum payment. Instead of paying your bill off in full, you simply pay the minimum payment and move onto the next month. Ah, good, this solves all your problems, right? Wrong. Paying the minimum payment means the rest of your bill gets added to next months bill with interest. This makes the following month even harder to pay off, meaning you may need to pay the minimum fee once again and add that month to the next ones, gaining more interest. Very quickly, you can end up with a huge bill on your hands that grows day by day thanks to interest rates.

You can easily end up in thousands of dollars of debt that’s very hard to get out of. This is what scares a lot of people, and could put you off getting a credit card. But, it doesn’t have to go like this.

Staying Out Of Credit Card Debt

As a little bonus, to end this article, I will provide some advice on avoiding credit card debt. The above scenario is all too common, but it really doesn’t have to happen if you know what to do. So, here are a few ground rules to follow if you want to get a credit card, reap the benefits, and stay clear of debt.

• Ask for a low credit limit
• Only use as much money as you can afford every month, setting a budget is a good idea here!
• Pay your bill off in full each month to avoid additional interest rates

Believe it or not, but that’s really all there is to it. If you don’t go overboard with credit spending, then you’ll have a manageable bill that you can pay in full and avoid any interest.

On that note, I hope you’ve enjoyed this kind of guide to credit cards. You can see how they benefit you, why people are a bit scared of them, and how to use them responsibly. I think they’re a great financial tool that everyone should try to make use of.