With credit card debt as high as it is in today’s world, you might think that steering clear of credit cards is a good idea. It can be fairly easy to fall into credit card debt. Remember, paying for something with credit usually means that you do not have the money at that point in time to pay for something. If you are being financially responsible, having and using a credit card (or cards) can actually have some major benefits on your overall fiscal situation.
First and foremost, having and using a credit card is a great way to bring up your credit score. Unless you plan on buying all of your major purchases with cash, having a high credit score is a prerequisite to getting the best mortgage, car, and other large loans. It is a good practice to purchase items on credit and pay your bill monthly. There are differing opinions on how to handle your bill, but it is my belief that paying the entire balance each month is the best practice. This way, you are paying the least amount of interest as possible, while still remaining in great standing with your credit company.
With the advancement of technology in the past 20 years, all “plastic” transactions are completed electronically. While this is convenient, it also opens the door for identity breaches. If you online shop, there is a potential risk of a security breach. Even when you slide your card at a store, there is potential risk. Just recently, Target had a breach of their security, and numerous people had their personal information stolen. This is where the benefits of credit cards come into play.
Cash is still the most efficient way to pay, but in this day and age, it is not realistic to pay for everything in cash. Paying with a credit card as opposed to a debit card is a way to combat the possibility of a security breach. You should have a monetary limit on your credit card so that if your information is stolen, they can only charge so much. With a debit card, the scammer could potentially drain your entire bank account. Also, if you find out that someone has illegally used your credit card, you can put any of the purchases in dispute. This luxury essentially allows you to challenge the validity of the purchase. It is much easier to put purchases in dispute on your credit card than recovering money stolen from your bank account.
For those that are not financially responsible, credit cards can cause some serious financial damage. However, for those that are financially responsible, they can actually benefit you financially. Whether it is building your credit score or offering more protection to you from identity theft, credit cards are a handy tool, that, when used responsibly, can positively affect your financial situation.
By Ryan Laspina
Senior Specialist, Red Flags and External Reviews at APUS
Ready When You Are
At American Public University, students are priority one. We are committed to providing quality education, superior student resources, and affordable tuition. In fact, while post-secondary tuition has risen sharply nationwide, the university continues to offer affordable tuition without sacrificing academic quality.