by Oye Shade

Created on: May 03, 2010   Last Updated: May 04, 2010

The benefits of having a credit card

Having a credit card can be very beneficial to your income management, below is a list of all the benefits.

*Short Term Loan

If you need extra money for any reason, credit cards allow you to take out short term loans this is particularly useful if you don’t have an overdraft on your debit card or in an emergency situation. The short term loan usually involves going over the credit limit and will induce a charge so only use short term loans if it is absolutely necessary.

*Fraud Protection

Credit Cards in particular have great security for fraud, identity theft and in case the credit card is misplaced or lost. There are 24 hr hotlines to cancel or report a card missing and also most banks share liability in a situation your card has been stolen and used. Credit Card acts have been put in place so that criminal use of a credit card is refunded in full.

*Discounts

Different Credit Cards offer special discounts in stores, hotel and so on, however the deals are unique to the credit card you acquire, so make sure you weigh out all your options before settling to one, or two as you can usually have more than one credit card.

*Better Credit Rating

Using a Credit Card responsibly (not going over the limit) will increase your credit rating which will make it easier to apply for mortgage, bigger loans and an increase in credit limit. It increases your credit rating because it shows on your record you can be responsible with credit and the bank will be willing to give you more.

*0% Interest Free

Depending on the credit card you have a number of months usually 6-9 months of interest free credit, which means you don’t pay back any interest, which is like free money. However, it is important to be responsible with spending as interest free period is only temporary.

*Emergency Cash

All credit cards offer an emergency cash service where you can withdraw a certain amount of money depending on your credit limit, it is usually a £250 emergency withdrawal available at ATMs

*Credit Limit Increase

If you manage your credit well, the bank will offer you a better credit card or an increase in your credit limit. You can also request an increase and the bank will inform you if you are legible.

*Insurance

Many credit cards- usually the better credit score cards offer insurance as a perk which will save you a lot of money. This often includes Travel insurance, car insurance and mobile phone insurance.

*Overseas Usage

Some credit cards allow you to use credit cards at overseas countries- this depends on the credit card service but this is useful as it save money on transfer from country to country.

* Sharing Credit Card Limit

With some services you can add users to your credit limit which is useful for managing money e.g. you can add a spouse or sibling to your credit card and control how much they can use.

Beware!

If a credit card is not managed properly such as going over the limit, you may incur charges and may built to a heavy debt which may lead to debt collection and court cases. Use responsibly

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