Credit cards sometimes get a pretty bad wrap. Infact they can be a very useful tool and a good way of dealing with the peaks and troughs of personal finances. Credit cards offer easy credit when other means of credit are not available to people. It is the case that if people are finding it hard to get credit in other formats then the interest rates can be very high, but compared to other “last resort” types of finance such as payday loans credit cards are actually quite cheap.
Some credit cards offer rewards for spending on the credit card. This can mean that there are significant discounts on items such as airline flights and hotel stays. There is also cash back which gives a proportion of the money spent as cash back to the credit card borrower. Some credit cards offer free insurance on items that are bought with a credit card. This can include travel insurance on flights or hotel stays that are bought with a credit card. It can also include purchase insurance and extended warranties.
Credit cards also offer flexibility in how money is borrowed. Unlike a loan or equity release with a mortgage a credit card only borrows money when it needs to be, when the money is spent. There is also flexibility in paying the money back as the card can be paid back immediately or a considerable balance can be kept on the card from month to month.
Credit cards are very useful when a person is travelling abroad. Credit cards that are issued by VISA or MasterCard are accepted at a large amount of locations around the world – just under 30 million although this number is always growing. A credit card can also automatically pay the shop keeper or service provider in the local currency while billing the individual in Australian dollars.
Credit cards also have grace periods during which interest is not charged. This can mean a large interest free period for a card user who settles their credit card statement every month. This can be particularly useful for a person who has expenses from their job that they are expected to reclaim.
Introductory offers are also something that credit cards can provide. Introductory offers can range from signing on bonuses, zero per cent interest deals on spending or balance transfers or accelerated rewards and cash back. These introductory periods last for a few months.
People, not credit cards cause credit card debt so don’t blame the cards or the lenders and remember that credit cards have benefits or no one would use them
