By Kevin Sathapornchaisit

Speaking from personal experience, many of my peers and friends do not use a credit card. Before I learned about credit cards I also didn’t see the value in owning a credit card. I, and the people I spoke with, feared paying interest and was unsure of the difference between credit cards and debit cards. However, credit cards have massive benefits over using a debit card, and if you use your credit card responsibly, by paying off your credit card in full and on time, and ideally below 10% of your credit limit you can reap the benefits of credit cards!

Rewards

One advantage that credit cards have over debit cards is that credit cards rack up rewards. Everytime you swipe your credit card the merchant gets charged a percentage fee of whatever you bought, and those fees are what contributes to your rewards. If you were to pay in cash or use a debit card you’d be missing out on those rewards that you would’ve gained if you paid using a credit card. These rewards can vary from cashback to earning points that you can redeem for airline miles or goods like electronics. The rewards depend on the type of credit card you use.

Building Your Credit

Using a credit card responsibly will help build your credit score. Debit cards don’t contribute to your credit score at all. Responsible credit card usage will be reported to credit bureaus and this will develop your credit history which increases your credit score. Increasing your credit score can lead to lower interest rates on a car payment and credit cards or even on a mortgage! You can even get auto insurance and other types of insurance payments lowered with a good credit score.

Fraud Protection

Credit card companies protect their users from any fraudulent activity on their accounts. If someone were to make an unauthorized payment on your debit card, the money would be taken out of your account instantly and it could take months for them to file a claim and for it to be processed. With a credit card, no money has left your bank account and this process would only take a quick phone call to reverse the charge. Credit card companies often offer zero liability on unauthorized purchases.

Convenience

Credit cards offer a convenience that debit cards do not offer. They allow you to pay for things whenever you want, even if you don’t have the money to do so yet. For instance, if you want to buy something, but you don’t get paid until the end of the week you can do so with a credit card! However, it is important to pay it off before your statement balance is due.

When Should You Not Use a Credit Card?

If you have trouble paying off your credit card in full on time every month, perhaps a credit card isn’t the right choice for you. This would lead to racking up credit card debt and lowering your credit score. 

If you find yourself spending more than you can afford, owning a credit card can exacerbate that problem. Paying off any expense you may have with a debit card will make sure you don’t spend more than you have. 

To sum everything up, you should use a credit card because they earn rewards like airline miles, they build your credit score, they protect you from any fraudulent activity, and they offer convenience. It is critical that you pay off your credit card in full and on time every month.