Many people learn to see credit cards in a negative light over the course of their lives due to the numerous stories of people that have racked up thousands in debt using them. However, credit cards are important tools in the arsenal of savvy wealth investors. Here are some of the ways credit cards can help you.
Build Your Credit Rating
If you are like most people, you’ll need a loan to get on the property ladder or to get involved in other things that require strong financial commitment. Lenders will be more disposed to approving your loan request if you have a strong credit score. One of the best ways to improve your credit score, is to get a credit card and then make sure you are keeping up with all your obligations. With a strong credit score, you can show yourself as someone financially responsible, leading to lower insurance premiums, lower interest rates, better lease terms and more.
Save Money through Rewards Programs
When you use a credit card, you get to take advantage of cash incentives and a plethora of other perks. When you pay off your credit card balance, you cash in on these incentives which can amount to tidy sums in the long run. Imagine cashback deals that put back around £100 to your account every month. In two years, you would have saved £2400. This amount can go towards reducing spend on other projects.
Keep Track of Your Expenses
Many credit card companies provide you with a monthly statement of your spend. Some of the statements come as detailed reports featuring percentage changes against the previous period allowing you to see changes to your spending habit. This saves you money that would have been spent on filing for reports and also helps you to improve your spending habits.
Protection against Bad Purchases
If you have just purchased a big-ticket item, the last thing you’d like to see is a defect that requires replacement. When such defects are noted, you can return the item to the store if their warranty covers it. In the event that there is no warranty or that the warranty simply didn’t cover the purchase, you will have to live with the loss! However, if you made the purchase with your credit card, there is the likelihood that the purchase is covered under the standard automatic purchase protection offered on most credit cards. This is the reason why savvy credit card owners check for the details of the credit cards protection policy including how long the purchases are protected.
Protection for Your Money
If you carry cash around or use a debit card, you are at risk of losing money. Credit cards have built-in mechanism that offers some measure of protection for your funds. Suspicious behaviour can lead to your provider freezing access. Alternatively, you can combine your credit card with any of the mobile payment technologies available today for improved security.
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