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Should I Get a Credit Card?

by Magical Credit

Making the call on whether or not to apply for a credit card is a delicate decision, especially if it's your first one. It can be intimidating and unnerving – do you really want to expose yourself to identity theft? Will you get taken advantage of by big banks, interest fees, or swipe fees?

credit card benefits first credit card

Don't sweat it. While there're certainly security issues to be mindful of – like the ones listed above – the advantages of a credit card are too good to pass up. There's a plethora of positives to grabbing your first credit card, which will beef up your financial muscle in the long run.

Many people see credit cards as a convenient borrowing tool, and nothing more. Or it's seen as a vice to overspend, consumers abusing credit privileges for inane purchases. All of this can be offset by using your credit card responsibly, and not as an extra pile of spending money every month.

We won't delve into some of the glaringly obvious advantages of a credit card. For example, you know that by paying off your credit card consistently, you build up good credit over time.

So these are some of the lesser-known credit card benefits you can cash in on if you nab your first credit card.

Protect and Secure Your Finances.

Remember that concern about identity theft that made you apprehensive about your first credit card? It's actually the other way around – a credit card offers more protection and security than cash or debit.

If you get your wallet or purse stolen and you're carrying cash, there's no way to get it back. Your money's gone. Debit cards, being linked to your bank account, is an easy way for a crook to access your wealth and clean you out. Once your funds are withdrawn from your debit, your money vanishes instantly.

When a credit card gets stolen, acting quickly can prevent thievery or identity theft. A simple phone call to cancel the card ensures you don't fall victim to fraud. You have protection if your credit card is used; your bank will reimburse any fraudulent payments from your stolen card, unless they have a very good reason to refuse the refund. With how credit systems work, your money isn't withdrawn instantly, giving you and your credit card company time to resolve the issue.

A Credit Card Takes Advantage of 'Grace Periods'.

Another one of the huge advantages of a credit card is you're given grace periods with payments.

Comparing credit cards to debit cards once again, a payment made from a debit card immediately withdraws funds from your account. A credit card transaction works on grace periods, essentially giving you an interest-free loan for around 20-25 days. Grace periods allow you to use credit, interest free, until the payment for your credit card is due. As long as you're paying your balance in full before that payment deadline, you can enjoy this 'interest-free loan' for a short period of time.

There are certain bank account plans that require you to remain over a certain monetary threshold without being charged. Keeping funds in your account for as long as possible, via credit cards, helps meet the requirement.

For those shrewd with finances, remember you can pay credit cards off from a high-interest checking account, enabling you to earn interest on your money. That extra interest piles up the longer money stays in the account, adding up to meaningful amounts!

Financial Flexibility.

Avid travelers will vouch for the flexibility of having a credit card. Renting a car or booking a hotel room is much easier to do with a credit card. This is especially true with overseas traveling, as many cards are widely accepted so you aren't affected with the hassle of juggling currencies.

The two aforementioned services may hold hundreds of dollars on your account if you use debit. They want insurance in case of damages to the room or car; a credit card makes it easier for them to retrieve funds, in turn making it easier for you to complete rentals.

Debit cards aren't as universally accepted as credit cards are, so they won't always be acknowledged as payment like a credit card would be. The convenience of credit cards is unmatched!

Earn Cash Back on Purchases.

Some credit cards allow the opportunity to receive a percentage of what you spend back as tax-free cash. This is usually credited to your account once a year. The rates are low – maybe 1-5% - but hey, free money right? Using your credit card a fair amount will only increase your cash back, as you receive a percentage relative to your spending. Credit card plans can cap the 5% cash back, but unlimited 1% cash back isn't uncommon.

The only caveat to cashback credit cards is you must clear your balance every month. These special credit cards have higher interest rates – high risk, high reward in a sense – so they're only worth using if you can pay off the bill before interest kicks your butt.

A first credit card can seem overwhelming, but the credit card benefits are almost too good to pass up on. Using your credit card responsibly won't leave you susceptible to punishing interest rates or unprotected finances. The answer to 'should I get a credit card' is pretty clear!

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