Benefits of using credit cards
When used properly, credit cards can be a safe, convenient way to pay for goods and services. Credit cards have several advantages:
- They are safer than carrying cash.
- They are accepted at millions of locations around the world, including online sites.
- You can purchase goods and services now, even if you don't have the money on hand.
- The credit card issuer will act on your behalf during disputes with merchants.
- If you promptly report a lost or stolen card, you won't be responsible for fraudulent purchases or withdrawals over $50; MasterCard® or VISA® cards have "zero liability" protection, which means even that $50 is waived in most cases.
- Some cards offer rewards programs for usage.
Cautions about using credit cards
Credit cards are serious financial products and need to be used with care. You should know:
- If you carry a balance you will pay interest, increasing the real cost of the items you purchase.
- You need to make sure you can afford to pay back what you charge.
- They can make impulse purchases easier, and that can add up and blow your budget.
- They require discipline about paying on time and staying within credit limits; mistakes can result in fees, interest rate increases (sometimes significant) and damage to your credit history.