Credit cards are a great tool that can provide you with many benefits. If you don’t know about these advantages, it might be time to consider getting one of your own.
So if you are wondering how credit cards work and why you should buy one, here are five reasons you should learn.
SoFi experts explain, “Credit cards differ from other types of loans in that they offer a physical payment card used to make purchases. Traditionally, credit cards are made of plastic, but many credit card issuers now offer metal cards, usually for their premium accounts that offer travel rewards.”
Convenience
Credit cards are convenient to carry and use. For example, you can swipe one in a store or online to make purchases, which means you don’t have to carry cash or worry about carrying too much money on your person. This makes shopping easier and more enjoyable. You don’t have to worry about losing your wallet or getting pickpocketed while out and about.
If you’re buying something online, it’s as easy as entering your credit card information into an online form and clicking “submit.”
Rewards/Cash Back
Cash back rewards and rewards points are a great way to earn money. You can find reward programs in nearly all credit cards, but some offer a better value than others.
Before choosing a cash-back or rewards card, you should read reviews of different reward programs and find out how much you would need to spend on the card before earning any money back or reward points.
For example, if you’re looking for ways to increase your income without working more hours or taking on additional responsibilities, this is one of the best options!
Security/Protection
- Credit cards are safer than cash. Anyone can steal your money, but it’s much harder to steal your credit card information.
- Credit cards are safer than debit cards. Even if you have a PIN for your debit card, someone could still take out money from an ATM that was not connected to the bank and still get away with it.
Insurances
One of the best benefits of credit cards is their insurance policies.
Credit cards offer insurance for purchases, travel, shopping, rental cars, properties, and identity theft. Insurance coverage includes:
- Extended warranties on purchases made with your card (up to one year)
- Travel accident insurance up to $1 million if you are injured or killed while traveling on an eligible trip paid for with your card.
- Purchase protection against accidental damage or theft within 90 days of purchase (limits apply)
Investment Potential
Credit cards are a great way to start investing. They can be used to buy stocks, mutual funds, bonds, and exchange-traded funds (ETFs). There are many advantages of using credit cards as an investment vehicle:
- It’s easy to set up an investment account.
- It has low minimum investments.
- You can easily purchase small amounts of stock for $10 or less.
- You don’t have to worry about paying taxes on your dividends until the following year.
- It’s possible to get refunds on fees paid during the year by filing your taxes early.
It is safe to say that credit cards are an excellent tool for managing personal finances. They offer many benefits to help you get ahead financially and keep tabs on your spending. The bottom line is that if you’re looking for an easy way out of debt or want to keep track of your spending habits without having to write them down, then credit cards are the way to go!
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