The Advantage of Paying With Credit

You may have read about the dangers of misusing credit cards, and it is true that many people have run into serious problems because of the careless use of credit. Used properly, though, credit cards can be a source of many benefits, and can provide certain protections and warranties not available when paying by cash, check or debit card.

This article will point out the types of benefits available, but not name any specific card, because the features and advantages of each card are subject to change. There are several good comparison websites which will give you up-to-date information about the different cards available.

There are always cards offering bonuses, or “freebies”, as soon as your spending on the card reaches a target amount. The offers vary, so choose one which fits in with your life style.

Most electrical goods come with a free year long warranty, so if the product becomes unusable you can get it repaired or replaced at no further cost to you. The retailer may also try to sell you an extended warranty, but this is usually expensive. There is at least one credit card that gives you an extra year's warranty if you pay with that card. Be sure to follow the instructions on registering your item. Of course, the balance on the card should be paid in full at the end of the month, or you will be charged interest. You must remember that paying the balance in full is vital in most cases; otherwise the interest you pay can outstrip the value you get from the incentive.

Using the right credit card can also give you an advantage when you spend abroad. By carefully choosing the card you use, you could sometimes be up to 6% better off than if you had used another card or bureau de change. Paying the balance in full is, again, vital if you are to maintain your savings. The offers from individual cards and companies vary widely, so don't forget to monitor the websites available to help you compare the various choices.

Another benefit from buying with a credit card is that it offers you protection against the retailer going into liquidation, or failing to supply your product for some other reason. If your purchase costs over $100, your lender is jointly liable with the retailer. If the company does cease trading, you have exactly the same consumer rights with the card company as you do with the retailer, ensuring compensation or your money back. This applies if you only pay a deposit on the credit card, even if this deposit is less than $100. It is the value of the item you are buying that the card company is jointly liable for. It can't be stressed too often that you must pay the balance in full to avoid interest charges.

As you investigate and find cards that suit you, you may be tempted to apply for all the cards you have found. Yet it is important that you consider the possible impact on your credit score. Every time you apply for credit, the application has an effect on your credit score. If your credit history is good, there is no need to be too cautious, but if it is not, be wary and make sure that the incentive on offer is worth the risk. Bear in mind that, with credit applications, the overall number matters less than the frequency. If you do want multiple cards for different purposes, after you first couple of applications only apply for extra cards every few months.

Your credit score can also be lowered if you have multiple cards with high, unused, credit limits. So, if you are not going to use a card any more make sure you cancel it with the card company, don't simply cut it up.

The last advantage to look at is immediate access to funds, allowing you to pay for expensive emergencies or unexpected bills  over time.

Using credit cards can make life a lot more comfortable, but always remember that careless use of credit can make life uncomfortable as well, and use your cards wisely.