Credit represents an agreement to pay for goods or services you receive against a credit account. If you use it responsibly, you receive many advantages by charging items to credit lines or credit cards. A good rule of thumb is to use credit based on your ability to repay it. Debt can quickly escalate into problems if overspending becomes a habit or is not carefully monitored as part of your financial health.
Ease of Use
Credit is convenient to use; swiping a single credit card is quicker than counting out cash or worrying if you have enough money with you to cover your purchase. For travel considerations, carrying a credit card instead of money can be safer than touring with a bulging wallet. If your credit card is lost or stolen, it can be canceled and replaced. If your money is lost or stolen, you're out of luck. Credit cards also provide handy records of your purchases.
Internet, Phone or Mail Order Purchases
A credit card is often required for ordering online, on the phone or by mail. Purchasing online is convenient, quick and can be cheaper than driving to a store to purchase your item, especially if the merchant provides free shipping and returns. Using a credit card on a secure, encrypted site is safe.
Emergencies
Credit can help you meet expenses that may arise in times of crisis or emergency, such as unemployment, illness or accident. If you have no way to pay for an emergency, a credit line that you can pay back when you get on your feet can be a lifeline.
Purchase Protection
Many credit card companies offer purchase protection against damage, loss or theft when you use a card to make your purchase. Depending upon the card, this protection can extend for several months after your purchase. Your original receipt or card statement is usually all you need to make a claim. Many credit cards also offer an extended warranty or insurance coverage on items you buy on a card. If you have a dispute about an item you purchase on a credit card, the credit card company will frequently step in and handle the dispute for you as soon as you report it as fraudulent or questionable.
Membership Points or Benefits
Many credit cards offer benefits for purchases, such as points for rewards, discounts, cash back rebates or free airline miles. The credit card company offers these incentives to encourage you to use your card regularly, and may have a membership fee for enrollment. You accrue your points or miles over a period of time, then use them toward eligible
Build Your Credit Score
A good credit score is important to your financial health. Using a credit line or credit card responsibly can help build your credit, especially if you keep your balances low, pay on time and maintain a long history of the account.
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