3 Reasons Why You Should Use A Credit Card [Updated 2019]

Society has taught us that credit should be avoided, that credit is bad and that it can cause you your financial ruin. Some have even practiced and promoted cutting up credit cards so they won’t be able to use them.

To some people, having credit is a terrible thing. Indeed, having credit can become a financial hazard. However, this is only true if you don’t know how to be responsible with your finances.

With a sound financial education, knowledge about credit and the discipline to be diligent with payments, credit can help you progress faster in life. Remember that credit cards are just a tool.

Whether they are destructive or beneficial to your life depends upon your use of it. There are a lot of advantages with having and using credit cards. You might even be surprised with just how powerful and useful they can be.

Here are 3 reasons why you should use a credit card.

Build Credit History

A debit card and a credit card are two different financial tools. With a credit card, you can build your credit history which enables you to benefit from the advantages with having a good credit score.

You can’t build a credit history with a debit card. If you use a credit card and you’re on time with payments, you are sure to have a good credit score. Here are some of the benefits with having a good credit score according to The Balance:

  • Low interest rates on credit cards and loans
  • Better chance for credit card and loan approval
  • More negotiating power
  • Get approved for higher limits
  • Easier approval for rental houses and apartments
  • Better car insurance rates
  • Get a cellphone on contract with no security deposit
  • Avoid security deposits on utilities

There are a lot of factors that influence your credit score. According to Credit Cards, these are the 5 components of a credit score:

  1. 35% – Payment history
  2. 30% – Amount of debt relative to credit limits
  3. 15% – Length of time you had credit
  4. 10% – Recent application for credit
  5. 10% – Credit mix 

If you still don’t have a credit card and you’re still having second thoughts about getting yourself one, know that age of credit is a factor that influences credit score. This means that having a credit card early on can help you better with building a good credit history.

Rewards and Points

A lot of companies offer rewards and points whenever you use your credit card. These points can then be exchanged for gift cards or you can even use them to buy the products from the credit company’s partners.

For example, with a JCPenny credit card, you get 1 reward point for ever $1 you spent at their stores. With every 200 points earned, you get $10 in JCPenny rewards. Moreover, here are other benefits with having a JCPenny credit card according to Future Fuel:

  • No annual fee
  • Multiple exclusive deals for cardholders
  • 100 special savings days
  • No interest on purchases
  • Extra benefits for gold and platinum cardholders

A great use of credit cards for rewards and points is when you go to different co-branded stores. This accelerates your accumulation of reward points. For example, with an Old Navy credit card, you don’t just gain points by making purchases on credit from an Old Navy Store, you also earn points when you purchase from their sister brands. 

Here’s a list of stores you can get points from each transaction with an Old Navy credit card: 

  1. Old Navy
  2. Old Navy Outlet
  3. Banana Republic
  4. Banana Republic Factory Store
  5. Gap
  6. Gap Body
  7. Gap Outlet
  8. babyGap
  9. GapKids
  10. Gap Maternity
  11. Gap Factory Store
  12. Athleta

If you’re a frequent shopper from these stores, having an Old Navy credit card can be beneficial for you. However, to be eligible for their credit card, you need to have a credit score between 602 and 670.

This is where having a credit card early on can help you out. With an established credit history, being eligible for credit cards and other credit options won’t be a problem for you. 

Different companies can offer different sets of rewards. You also have to be cautious of annual percentage rate (APR) as some companies have high APR. 

Safety and Convenience

While debit card has the same form as a credit card, being small and portable, their functions are not the same. If you plan to make a big purchase, bringing a lot of money with you isn’t convenient.

It’s heavy, bulky and if you get robbed, you lose all of it. With a credit card, you won’t need a lot of money or any at all. While you could say that debit card offers the same convenience, credit cards are backed with more powerful fraud protection laws.

According to Experian, the Fair Credit Billing Act (FCBA) assures you that you won’t be responsible in case your cards are used in a fraudulent manner. With debit cards, it’s not the same.

The law governing debit cards is the Electronic Funds Transfer Act. This law can help you as long as you are able to go to the bank and inform them that you lost your debit card before someone else could use it.

Otherwise, you end up paying certain amounts.

  1. $50 – 2 days after the fraud
  2. $600 – 60 days after the 2-day deadline
  3. Unlimited – 60 days after

In other words, you can end up losing all your money in your debit card. The advantages of using a credit card is hard to ignore. We hope we were able to persuade in using a credit card so you can begin building a good credit history.

With this, you can enjoy a lot of credit options and applying for more credit cards won’t be a problem for you. Also, credit cards are safer than debit cards. As what Frank Abagnale said,

“I don’t use a debit card. The safest thing is a credit card because you’re using the bank’s money. If someone accesses your information, they are stealing the bank’s money, not yours.”

Learn what it takes to be a responsible credit card owner and decide to use a credit card today.