by Gordon Hamilton

Created on: August 29, 2009   Last Updated: October 13, 2011

There are many advantages to be had by using a credit card and they are fairly varied in nature. They relate to security, convenience and even the concept of earning you money from your natural spending habits. Provided they are used with a large measure of common sense, credit cards are therefore a wonderful tool in the financial wheeling and dealings of day to day life.

The advantages of using a credit card begin with security. Using a credit card to pay for goods or services eliminates the need to carry around large amounts of cash in your purse or wallet. If a credit card is lost or stolen and the fact is immediately reported to the card issuer, the card will be blocked and the likelihood of the card holder incurring losses will be reduced, if not in fact eliminated. Were cash to be lost or stolen in this fashion, it is of course gone with little hope of recompense.

Convenience plays a big part in the advantages of using credit cards. Paying with a credit card eliminates the need to visit a bank or ATM and can save what may very often be precious time. It also means that goods and services can be paid for or bought via the telephone or Internet, where this would clearly not be possible when paying in cash or by check.

The possibility of actually earning money is another big advantage to using a credit card. If there is no outstanding balance on a card and the card is used in payment, it is possible to leave the cash in an interest earning bank account until the required payment date. Payment can then usually be made to the card without interest being charged. Although this is unlikely to earn significant sums of money in the short term, when calculated over the period of a year or more, the additional funds accrued in interest can prove very useful for other purposes. Combining this practice with a credit card which offers a percentage cashback on annual spend means that money can be earned on the credit card in two different ways.

It is important to bear in mind how much has been made in the press in recent years of the level of credit card fraud and how it is rising. What these figures do not consider, however is either the number of fraud instances which are caused through negligence on the part of the card holder, or how they relate in percentage terms to the number of credit card transactions performed worldwide each and every day. Unquestionably, genuine credit card cloning and fraud does happen but not nearly to the levels which those attempting to sell newspapers, or increase the ratings on TV news shows, would have you believe.

It can not be denied that credit cards do pose risks in terms of accruing excessive levels of debt and in certain security respects. Where credit card usage is carefully controlled and monitored, however, and all due security precautions are taken, they can be a very useful and convenient tool to make day to day life easier and more convenient.

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