by Katerina Nikolas

Created on: September 01, 2010

Credit cards can represent financial disaster for some who have no control of their spending and payment patterns, but for the majority of people who use credit wisely there are many good reasons to use them. The best reason of all to use credit is to benefit from the cash backs which mitigate somewhat the cost of goods being higher in the first place, as merchants have to put their prices up in order to cover the costs of accepting plastic. Those who only use cash are effectively subsidising those who use credit.

There is an array of cash back cards and rewards cards to choose from for those with good credit. However a good cash back card represents far better returns than rewards cards which typically have a lower redemption value for points than actual cash value. It is well worth sourcing the credit cards which not only offer cash back but a statement credit as a thank you for using them. To get the best from cash back cards they should be used for everything including utility bills, student tuition fees, and everyday spending. Naturally they only pay if you clear your balance in full each month and never pay interest.

Many credit cards offer extended warranties on goods purchased and some offer insurance for accidental breakage and theft of new purchases, which is most convenient if you drop your new wide screened TV in the store car park. Some also offer free car rental insurance, travel assistance, and some kind of travel insurance. Travel insurance should be checked as some cards offer more than just lost luggage insurance. Those who travel a lot can receive additional perks when they use credit cards.

Zero percent APR cards are a good way of purchasing a high ticket item and then repay over several months without paying interest. If you have the cash to buy an expensive item it makes much more sense to leave the cash invested and making more money for you until the introductory offer on the zero percent credit card expires.

The most important reason to use credit cards is to obtain the built in protection they provide if there are problems with your purchases. Paying by credit card has proved invaluable to those holidaymakers in the UK who purchased their vacations on credit with companies which subsequently went bust, as the redress is much speedier as the credit company provides a refund.

Carrying plastic can be safer than large rolls of notes and most have identity fraud protection. They are convenient to use online for purchases and again offer protection for your purchases which the new wave of virtual credit cards does not.

The credit business has increasingly made ones credit score so vital in many areas of life that in America it is almost mandatory to use credit if you ever want to have a loan or mortgage. If you have no credit history or a poor score then you end up paying higher interest rates and losing out on the best insurance premiums, or even the job you wanted. Thus the use of credit cards is necessary to keep your credit score high and is the established way of building or repairing your credit score.

The credit card industry has set itself up nicely to effectively penalise those who do not choose to use credit. As it is almost an obligation to use credit to obtain the additional purchase security and all important credit score then it makes financial sense to use them to the utmost to reap the best rewards as you pay.

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