Today we have a guest post from Jan Richards, who writes about finance, credit & finding affordable boat insurance.
Credit cards can be a great tool for a lot of reasons. They can help you organize your personal or business expenses, you can earn rewards such as cash back, and you can build your credit over time. This helps you get lower interest rates on mortgages and other loans. It is of course important to pay your credit card in full every month to take full advantage of the credit card. Used wisely, a credit card is one of the greatest tools in your financial life. Here are 5 ways to use your credit card wisely.
Many credit cards offer a discount, this is especially true for store or gas cards. Just about every department store has a credit card to use exclusively at their store. Using this card usually yields you at minimum a 5 percent discount. This is true with gas cards as well. In the case of department store cards you may also receive special coupons and invitations to save even more money.
Some credit cards offer extended warranties on products you buy. This is important for things such as electronics or high end items. If the item comes with a manufacturers warranty, the credit card will simply add onto it. Usually the warranty lasts one or two years, but covers everything. American Express is one company in particular that is famous for offering a great warranty to its cardholders. This can save you hundreds of dollars a year in warranty costs if you are a big buyer of high end merchandise.
It is important to take advantage of credit card reward programs. Just about every credit card has some sort of reward program, whether it is cash back, airline miles, or gift cards. Some offer bonuses to shop at certain stores, or at least certain types of stores. The lowest cash back programs are around 1 percent cash back. Some can reach as high as 5 percent when factoring in bonuses. Many people simply opt for cashback for the simplicity. If you are a heavy traveler, a miles program may suit you more.
One of the overlooked benefits of a credit card is the ability to dispute a purchase. When you make a high risk purchase, or a purchase on the internet, you should use a credit card. When you use a debit card, the money is taken out of your account, so if there is a problem it is harder to recover funds. With a credit card, you do not pay until the billing cycle ends. You can then dispute items before you need to pay the bill. You can dispute if the product is broken, or not promised as provided. Disputing can save you a lot of headaches in the long term. Of course, always try to resolve the issue before disputing with the credit card company.
When traveling overseas, it can be costly to convert into local currencies. Some credit cards will not charge a currency conversion fee. Though most will, so it is very important to inquire about the currency conversion fee. This can save a lot of money for the seasoned overseas traveler.
Credit cards are one of the best financial tools around, assuming they are used right. There are so many benefits that it would be foolish not to get one. The thing with credit card benefits is most people do not even know about a lot of them. These are just a few, there are a lot more, and there is no reason you should not have a credit card.
Editor’s Note: While I agree that credit cards can be a great financial tool, some people simply are not responsible enough to handle one and, therefore’ should NOT have a credit card.