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Controlling Your Credit: 7 Powerful Reasons Why You Need a Credit Card

credit card close upSome of us don’t like the idea of owing money or using “theoretical” funds; we like the money we can see and feel. Many people have heard so many debt horror stories that they’re scared of credit cards. But the truth is, there are some serious advantages to having at least one credit card in your wallet. Here are seven of the biggest:

It helps you build credit.

You might think you’re improving your credit score by not using plastic because it means you don’t owe anything. However, having no credit can be just as detrimental as having bad credit. In fact, it can make it nearly impossible to take out a mortgage, get approved for a car loan, and many other big ticket items you may want to attain in the future. By taking out a credit card, spending wisely, and always paying on time, you’re building credit. This demonstrates your sense of responsibility, which makes lenders perceive you as a lower-risk borrower.

It expands your shopping options.

You have to have an electronic payment method if you want to shop online. “But wait,” you say, “Couldn’t I just use the debit card I have for my bank account?” Financial experts actually advise against this; debit cards are much more vulnerable to data theft and other online snafus. Fees for such transactions can be higher too, depending on where you bank. You can check out CardGuru for a rundown of cards with great features. But nearly every card will come with protections that allow you to dispute and cancel purchases.

It makes travel much easier.

These days, it’s nearly impossible to travel without a credit card. Again, a debit card isn’t as safe, and some establishments won’t be swayed by your bank balance, either. If you want to rent a car or stay in a hotel, you’ll need that credit card as a bit of collateral. Even booking flights are better with a credit card. You can choose a card that gives you points toward air miles, thereby making travel cheaper.

It’s safer than cash.

Whether your wallet is stolen from your desk or hotel room, or you’re mugged on the street, you can kiss any cash goodbye; that money is gone, with little hope of recovering it. It’s a different story with your credit cards. You can call and cancel them immediately — and then order replacement cards with new numbers. If a thief manages to use your card, then the card company will gain valuable information about who potentially stole your plastic, and potentially crack the case.

It makes you appear more responsible.

Credit checks aren’t only performed when we take out loans. When we fill out an application for a rental property, or even apply for a job, the landlord or potential employer might review our report. If you’re just starting out, or getting back on your feet, having an open line of credit you’ve been faithfully paying on is a plus. For starters, it’s evidence that you’re responsible. In general, any person in a position of authority who doesn’t know you wants to see you have an established, credible identity. Believe it or not, a credit card can bolster this.

It’s invaluable in emergencies.

Ideally, we’d have an emergency fund set aside for events like car repairs, appliance breakdowns, and medical bills. However, even then we can come up a little short. That’s where a credit card can really save the day. In fact, it’s essential if you’d ever have to book emergency travel. As long as you’re prepared to make those payments, you’ll never have to worry about an emergency derailing your entire monthly budget.

It can provide a fresh start.

So, you’ve made some mistakes in the past; most of us aren’t the same people we were when we first entered adulthood. If your report is full of old debts, bankruptcies, or anything else that you’re haunted by, the new and improved you can begin rebuilding your credit rating with a credit card. Of course, if your credit is in desperate need of rehabilitation, you’ll probably need a secured card. But proving you can handle a secured account is the first step toward becoming eligible for a regular, unsecured line of credit.

Conclusion

It’s good to be cautious about credit cards. After all, using them improperly can be damaging to your financial health. But if you have a healthy, realistic attitude about spending, and make all your payments on time, you’re building a good credit score.

That good credit score can improve your eligibility to borrow in the future, and prove you’re a trustworthy, responsible individual to prospective employers. Not to mention, it can be a much safer, more convenient way to spend, which can even bail you out in the event of an emergency.

Photo Credit: The Consumerist

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