More than ever, Americans are using credit cards for purchases of all size, and for good reason. Using a card on smaller purchases can boost your credit score, keep you secure, and earn you money.
Traditionally cash and debit cards have been used for smaller purchases. However, in a society that values convenience over everything, it is no surprise that customers are beginning to show a strong preference for their credit card. Some may be worried about the implications of this change. It is well known that unpaid credit card debt has huge interest rates that can land irresponsible spenders in hot water. Certainly this is a valid concern that must be addressed.
However, when these risks are tempered by the responsible use of credit cards, the rewards are great. Freedom Financial created this post to tell you why people are using credit more than ever.
Improving Your Credit Report
Potential employers, loan officers, and cell phone companies all check applicants’ credit. Freedom Financial recommends responsible use of a credit card which could help you build a positive credit history. Many people simply have an underdeveloped credit report because they don’t use a credit card. Just remember, when you do use a card, you must be on top of paying your credit card bill on time. By always paying on time you can show a boss your competence or secure a low-interest rate on a loan. Small purchases with a credit card can keep your balance well below the card’s limit, which will also boost your credit score.
The safety benefits of credit card versus cash when shopping in the mall are obvious. If you drop a 100-dollar bill it’s gone forever. If you drop your credit card, no problem: simply report it lost and have a new one sent to you. However, Freedom Financial thinks the safety benefits of using a credit card versus a debit card online may surprise you.
The maximum liability on a credit card that is used fraudulently is 50 dollars. Your liability limit with a debit card depends on when you report it stolen. If you report it within 60 days, your liability limit is $500, while after 60 days there is no limit. The other downside to debit online is the fraudulent charges will affect your actual bank account.
Freedom Financial wants you to get the most bang for your buck. With greater competition than ever between credit card companies, consumers win. Rewards programs offered by credit card companies make paying with cash like throwing money away. Whether you want cash back or miles towards your next trip, shop around for a card that offers rewards that you value. By using rewards cards to pay bills, you can really rack up the rewards. Just make sure to pay your bill on time and in full.
It can be scary taking on credit card debt, but as long as you’re responsible, you could join the many Americans making their money work for them.