6 Reasons Why You Need a Credit Card Even If You Don’t Carry Any Balance

Credit cards are not made only for folks who impulsively buy things; they can be beneficial to just about anyone as long as he/she is acting responsibly.

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We’ve all heard horror stories about people who spent their way to debt thanks to, in part, the convenience of credit cards. Simply put, a piece of plastic makes shopping that much easier, but at the end of the day — you still have to pay the bill.

And unsurprisingly, these sort of stories prompted many to turn their backs on credit cards; I was one of them, until I realized that this “strategy” (if I can call it like that) was actually working against me. Why in the world I wouldn’t get the free travel at the end of every year like my friends do?

Today I want to convince the folks who don’t like credit card to switch boats. The following 6 reasons convinced me and perhaps they can do the same for you. Let’s roll…

1. Credit card will help you build a good credit score

Sooner or later you may need a loan (mortgage) and at that time you will want to have a good credit score. Not having a credit card will make things more difficult for you as the bank or other loan provider will have harder time figuring out what kind of terms it can offer you.

By having a credit card, and using it responsibly, you can build your credit score over time — and when the time comes, get a that much better deal. By paying off what you owe every month, you’ll get the same kind of “experience” as with a debit card.

Also read: 4 Ways How Credit Cards Can Improve Your Credit Score

2. Get rewards

If you get a credit card that offers rewards, you can earn points or cash back for every dollar spent with that card. This, again, presumes that you are NOT carrying any balance from one month to the other — cause if you do, the interest you’ll pay on that balance will outweigh any rewards you may earn as a result of your credit card usage.

For what it matters, this is how we roll and it helps us score free travel at the end of each year. You, on the other hand, may opt for a credit card offering cash-back rewards.

Related: Top 7 Reasons To Use Credit Card for Everything

3. Credit cards help in emergencies

We advise our readers to have an emergency fund so they could deal with tough situations life throws at them, but we also realize this is easier said than done.

Say your car breaks or your computer suddenly stops working, what are you going to do? Most people think of these two as basic necessities that let them do other things in their lives. And without an emergency fund, most people tend to pay for (car) repair or buy a new computer with their credit card. Nothing wrong with that as long as you pay off what you owe on time. But even if you can’t do that, you do need a working car and computer (or whatever happens to be your emergency).

4. Credit card is safer to use than cash

If a credit card gets stolen, you don’t get to lose any money by promptly calling your bank and reporting the loss. It will cancel that credit card and issue the new one for you. It’s that simple, whereas you can say goodbye to your cash if your wallet is stolen or lost.

In addition, the credit card company will also remove fraudulent charges from your account, if some are found.

5. Credit card helps you track your spending

There is one catch here, though. Although you regularly get credit card statements and they show you where you’re money is going, it is much easier to go on a shopping spree with a credit card than with cash. Simply put, with cash you “get physical” with money, whereas something similar doesn’t exist with a credit card. It’s just plastic.

To be fair, said credit card statements will show you exactly what you spend your money on, and some credit card companies will even categorize the expenses for you. This could be a good tool if you’re looking to develop a budget; and as long as you can control your spending, a credit card statement can be a great tool in your personal finance arsenal.

6. Credit cards get you extra protection

Many credit cards come with a few handy bells and whistles, like a complimentary travel insurance that you can take advantage when your trip is delayed or canceled, your luggage is lost, or you’re hurt while traveling.

In addition, there are purchase protections included with some cards, including a free replacement of the item you have bought 30-90 days after the purchase. Usually as part of the same package, you get an extended warranty program that could add up to two years to your manufacturer’s warranty. That can save you a bundle on expensive service plans.

Finally, let’s not forget the price matching service that ensures you always get the best price. Under this policy, you get a reimbursement for the difference if the price of a purchased item goes down within a specified amount of time. All you have to is submit a claim and wait for some period of time to get the price difference to your account. Pretty cool, right?

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