Uses of Credit Cards:
Credit cards minimize stress for people especially in the U.S where it is generally accepted as an option for payment. Credit cards can be used at gas stations, post office and even down to the local farmer’s market. They make payments easier and quick as well as earns rewards for the cardholder if properly managed. Some of the rewards are- free flights, cash back, and bonuses.
What exactly are credit cards? when compared to debit and prepaid, what difference stands out?, How do you get the best from the many available options?. Below is a detailed guide.
Should i apply for a credit card?
It is undoubtedly difficult to run a transaction nowadays using only cash and checks. For some transactions, it’s simply impossible. An example is an in-flight meal purchase where the debit card is acceptable. However, a credit card has more advantages over a debit card.
Some advantages of a credit card:
-It boosts credit:
If you use your credit card reasonably, your credit score will increase. These scores can be used while getting a loan or mortgage and even for employment. Not only that, but they are also considered in factors like car insurance rates and apartment rentals.
-Enhances your rewards:
With a credit card, you can get a discount on purchases, earn airline miles or cash back. Some credit cards offer perks, such as free checked bags on airline or shopping bonuses.
-It protects your purchases:
You get compensated in case of stolen, lost and damaged purchases. You can also be compensated if the product you bought gets a price decrease within a given time frame after your purchase.
You have protection in the case of a stolen credit card. Even if the thieves make a purchase with your card, you are covered.
-Reduces travel expenses:
With the general acceptability of credit cards, around the globe, many don’t demand foreign transaction fees. It is more convenient and less expensive using a credit card than local currency. Again, it is safer to carry than cash.
The means of curtailing expenses has been the major challenge with credit cards. However, there is a provision in the case of emergencies such as medical bill, car breakdown, or travel issues.
Let’s compare cards:
Charge cards, debit cards, and prepaid debit cards Vs Credit card:
There is uniqueness in every card: Each card offers a different service which others do not. For instance, many credit cards demand an annual fee while the reverse is the issue with others. Before you apply for any card, carefully examine its rates, fees, and general customer agreement. Debit cards do not demand either monthly or annual fees.
There is a similarity between Credit cards and charge cards:
You can make a purchase now and pay for it using any of the cards. However, there are major differences, at what “later” means. Balances at charge card can be paid at every billing cycle. Not the same as a credit card. A credit card can allow you to pay in installments at least 10% of what you owe while interest is charged on the remaining balance. With the payment patterns, a charge card is preferred over a credit card for those who want to avoid a balance. Charge cards have high charges for late payment or even part payment.
Again, charge cards offer better rewards although with high fees. The American Express is the major dominant of charge card market. In the other hand, credit card charges no annual fee. With this, you can cut down on expenses.
Prepaid debit cards share some similarities:
You can load your card with the sum you want to spend, instead of having to withdraw on your bank account. These cards are more considered a gift card. Prepaid debit cards help you limit your expenses as you enjoy the convenience of purchase making. They’re more secure than carrying cash. When compared to a credit card, they offer no purchase protection, reward, and no credit building and emergency spending ability.
Neither debit cards nor prepaid debit cards can boost your credit. Additionally, there is no record with credit bureaus of your responsible use of the cards. Debit cards are only electronic checks, that enables you to spend from your bank account.