A credit card is, in essence, a short-term loan. If you pay them back at the end of each month, you won’t be paying any interest. As long as you handle your credit card responsibly, it will provide benefits, security, and accessibility.
Why do people use credit cards?
Other payment methods, such as debit cards and cash, may appear to be a more practical way to stick to a budget. Credit cards have a nasty name for encouraging users to spend money they don’t have, especially when appealing rewards are promised.
However, we believe that a decent credit card is a must-have. Secured credit cards, when used appropriately, may be beneficial to your financial well-being. Credit card members who use their secured credit cards in Canada wisely might earn money just by swiping them!
Let’s delve a bit deeper to know why you should consider using a credit card.
- Credit cards develop a credit history
A history of paying credit card balances on time improves your credit score tremendously. Credit card use, unlike debit card use, is disclosed to the bureaus that monitor credit ratings. The longer you use credit cards, the more credit history you will develop, raising your score even further.
- Credit cards provide sign-up bonuses
Many secured credit cards Canada provides sign-up bonuses as a welcome gift. To get the incentive, you must end up spending a certain amount (sometimes over a certain time period) Some cards have a deal that offers 100,000 extra points after spending $4,000 in the first three months, and others alike.
- Credit cards give cashback
When you purchase with a cashback credit card, you will earn a small amount of money back to spend. The monetary reward might range from one to six percent of the entire purchase price. These benefits can add up to a substantial bonus over time. Discover pioneered the cashback system and is still one of the finest credit cards.
- Credit cards provide incentive schemes
There are nearly as many incentive schemes as there are credit cards. The idea is to select a rewards program that complements your existing purchasing patterns or collaborates with a retailer you currently shop.
- Credit cards keep track of your expenditures for you
Some credit card firms store your spending information for years. You’ll save time and work on your taxes if you already have a record of the previous year’s expenses. Business costs, rental property charges, charitable contributions, and other problematic tax return areas could be on a credit card bill.
- Credit cards prevent frauds
One of the most significant perks of credit cards over debit cards is the amount of fraud protection they provide. You will find a lot of secured credit cards in Canada to protect your account by monitoring it in real-time for indicators of suspicious transactions.
Credit cardholders are protected by federal law
If your debit card has been stolen, you may be responsible for $50. If your credit card issuer has a zero-liability fraud policy, you will not lose anything. Debit card fraud can be more troublesome than credit card fraud and can take time to report.
Still no sure how credit cards assist you in improving
your financial well-being?
- You can transfer your balance with credit cards
A balance transfer occurs when you move credit from one credit card to another. Balance transfers can also help you consolidate debt and simplify your life. You will, yet again, be required to pay what you owe but transferring the debt to a card with a reduced interest rate saves you money over time.
- Credit cards feature purchasing protection
Consumer protection is a colossal perk of many credit cards. Credit cards would provide protection plans on electronics, furniture, and other items you plan to use for a long time. Make a habit of keeping your invoices!
- Credit cards have grace periods
Credit cards, in general, serve as low-interest loans with a repayment period of a month or less. Credit cards, unlike debit cards, do not need you to have the cash for purchase available right away. There is a grace period during which you can pay on time. Use this grace period carefully because credit cards perform best for you if you pay as much as possible over each month.
- Credit cards feature insurance
Check the consumer protections offered by your credit card. There’s a high probability you’ll uncover advantages you weren’t aware you have. Many credit cards feature return protection, rental vehicle insurance, and trip insurance in conjunction with extended warranties and purchase protection.
- Credit cards are widely acknowledged
Credit cards make it much easier to arrange lodging and rental vehicles than debit cards. Credit cards are more widely acknowledged across the world than debit credit cards. If you’re going to a foreign country, use the reduced conversion rates on your credit card rather than paying exorbitant exchange rates for cash.
- Credit cards charge lower fees
Credit cards do not have overdraft fees or individual transaction fees like debit cards. Some credit cards have annual fees, the incentives and cashback you receive may offset them. Credit cards Canada can help you save a lot of money, keep your money safe, and even provide you some advantages.
The Final Pick!
A countrywide study conducted by LearnVest and Chase Blueprint found that the typical respondent had $5,000 in credit card debt. There is no justification not to use a credit card if you know how to use it appropriately. Credit cards provide incentives, security, and convenience, making it simple to enhance your credit.