iQuanti: Most people know that credit cards can help you earn points on every purchase — and that you can redeem these points for cash, statement credits, or shopping.
However, rewards points are just one of many advantages of credit cards. There are plenty more ways credit cards can help you financially.
In this article, we'll go over four key advantages of credit cards in addition to the rewards you can earn.
1. They Build Your Credit Score
Credit cards are an excellent credit-building tool because they play a part in four of the five key credit score factors:
- Payment history: This makes up 35% of your credit score. It measures how many on-time payments you make. Making every payment on time maximizes your score.
- Credit utilization: This makes up 30% of your score and measures your total balances against your total limits. Keeping your total balances under 30% of your total limits helps your score.
- Credit history length: This makes up 15% of your score. The longer you have your credit card open, the more it helps your score.
- Credit mix: This makes up 15% of your score. Having a more diverse mix of loans and credit cards improves your score. If you don't have a card yet, simply opening one helps here.
2. You Can Track Your Credit with Them
Many card issuers build a credit tracking and monitoring tool into their online portals. With these tools, you can track your credit score and look at trends over time — helping you spot areas for improvement and track your progress towards credit score goals.
Many of these tools also give you tips and tricks to improve your score with your card.
3. They Offer a Grace Period
Spending with a debit card draws money immediately from your checking account, which can be inconvenient and leave you at risk of overdrawing your account.
Credit cards, on the other hand, give you some time to pay back the money you borrowed without paying interest — typically around three weeks, although you should confirm the exact grace period of your card.
Since billing periods generally last 30 days as well, you might be able to put off paying for something for as long as 60 days.
This could come in handy if your paycheck still has a few days to hit your bank account. You can spend now worry-free, knowing you can pay it back once you get paid.
4. They Offer Fraud and Theft Protection
If your debit card is stolen, a thief could potentially drain your entire checking account. You may also run into issues with payments you already scheduled, creating even more problems.
According to the Electronic Funds Transfer Act, you could be liable for up to all losses depending on when you report the theft:
- Before unauthorized transactions: zero liability
- Within two days: $50 liability limit
- Within 60 days: $500 liability limit
- After 60 days: No protection
Credit cards are safer, thanks to the Fair Credit Billing Act. The FCBA limits your liability to $50 regardless — so if you report the theft seven days after, you still only have to cover up to $50.
That said, many card companies now promise zero liability for any fraud to attract customers and encourage card use.
Additionally, some card companies now come with tools that automatically monitor various websites and other areas for your sensitive information to protect you against identity theft and other types of fraud.
Credit Cards Offer More Than Just Rewards Points
Credit card rewards are great on their own — but that's not the only perk of getting a card.
Credit cards can help you build and monitor your credit. Plus, they allow you to delay paying for purchases and protect you against fraud and theft.
All that said, make sure you shop around for various card offers to get the card with the right features for your needs.
Press Release Service by Newswire.com
Original Source: The 4 Benefits of Credit Cards Besides Rewards
