Many people still use cash or debit cards to pay for everything they buy, because they’re not comfortable using credit cards, they don’t understand how credit cards work, or they simply don’t. want to waste time. to change their habits.
But every time you use your credit card to make a purchase, you get something in return — or at least you get it if you’re using a credit card. correct credit. Many credit cards earn rewards like refunds or flight mileswhile others have features to help you pay off your current debt or finance a major purchase over time no interest.
And some Credit cards offer travel protection in case you have a problem during your trip, purchase protection if an item you bought is damaged the next day, or even mobile phone protection if your phone is broken or stolen.
There are many benefits to having a credit card, so 2023 will be the year you put that debit card away and start using a card that can give you something. Let’s see what you’re missing out on by not using a credit card, with these 6 reasons to get a credit card in the new year.
One of the best benefits of using a credit card is that with most cards you’ll earn rewards for every purchase you make. The most popular types of rewards include refunds or tourist spots or milesbut there are other options too.
Sellers are generally not allowed to charge you more for using a credit card to pay for your purchase than cash or a debit card, and you will never have to pay interest on a credit card as long as you Pay your monthly bill in full. That means if you’re doing it right, there’s absolutely no point in leaving money on the table with a debit card when a credit card gives you something back for free.
Some credit cards even offer what we call a “bonus portfolio”. This means that for certain categories of purchases — such as grocery, food delivery or even just your fill gas tank — you can earn extra rewards every time you use your card.
Not every credit card has an annual fee, but some popular cards do, so you need to weigh the cost of the card against the rewards you earn or other perks of the card. But there are many incentives credit card with no annual fee Earn real rewards for free.
In addition to the rewards you’ll earn on all your purchases, many credit cards offer some Huge signup bonus. This means that just by signing up for a credit card and using it to spend a certain amount during the first few months you have the card (known as the “minimum spending requirement”), you can Earn a great reward instantly. get you started in the right direction.
Lots of credit card travel offers benefits that can make your trip more enjoyable. These perks can include everything from elite status at hotels to access to exclusive lounges at airports around the world.
Other credit cards will reimburse you for certain purchases, such as credits when you spend money at specific restaurants or with certain payments. food delivery serviceor when you sign up for a travel program such as Global Entry or TSA Pre-Check or check a bag with yours airline credit card.
You’ll even find some credit cards that offer nightly award certificates for a free hotel room or the chance for a friend to fly with you at a substantial discount. So just having a certain credit card can offer an experience you might not otherwise have — and even save you money along the way.
Of course, travel credit card with all these perks usually carry an annual fee – sometimes a large fee. But if you can actually use all the benefits, you’ll find that the value you get from them far outweighs the annual fee you pay for the card.
If you’ve been in debt from using a credit card in the past or some other loan and the interest on that debt puts you in financial difficulty, having a credit card allows you to aggregate Your debt may be the best current New Year’s thing you can ask for.
Some credit cards, when you first get them, offer what’s called Introductory interest on balance transfer. That means if you transfer your existing debt from another credit card or other type of loan to your new card, you won’t have to pay interest on that debt for a set period of time — usually. between six and 21 months.
Depending on your existing debt and your current interest rates, this could mean significant savings. For example, if you’re currently paying 15% interest on $4,000 worth of credit card debt and you transfer that debt to a balance-transfer credit card at 0% interest for 18 months, you’ll save a whopping $900 interest on his debt. debt for those 18 months. It’s money you can use to pay off what you owe instead of seeing it disappear to pay interest.
For transfer existing balance to new credit card, you’ll normally be charged a fee — the current standard rate is 3%. But you’ll save more than that by avoiding the outrageously high interest you’re currently paying on your debt, so you can pay it off faster.
In addition to credit cards that have an introductory interest rate on balance transfers, some credit cards have an introductory interest rate for new purchases.
When you first get a credit card with referral rate on purchases, you won’t pay interest on anything you buy with the card for a set period of time, usually 6 to 21 months. That means you can afford a big purchase — like an engagement ring, for example — and pay it off over time with no interest.
Now, going into debt is one of the big dangers of using a credit card, so it’s never a good idea to use referral offers on purchases to buy things you can’t afford and won’t be able to. pay off in a timely manner. Because once the introductory period on your new card ends, the interest rate on any remaining debt goes up to extremely high levels making it very difficult for you to pay it off.
So while it may make sense to use a Introductory offer on purchase to spread the cost of a large expenditure over time, or to get you through a short while when things get tough, it’s a good idea to plan ahead so you know you’ll pay off what you owe like any, and only make purchases that you can ultimately afford in the long run.
If you plan a trip for 2023 or what’s more, many credit cards offer the full set travel insurance benefits. These safeguards can protect you if something unfortunate happens before, during or even after your trip.
Some typical travel protection benefits include trip cancellation and interruption insurance, trip delay insurance, lost baggage return, delayed baggage return, car rental insurance, accident insurance travel accident and emergency evacuation insurance. Not every credit card has all of these benefits, and the type of protection that’s most useful to you will vary depending on your situation.
For example, if you fell ill before a covered trip and were unable to travel as a result, credit card cancellation and trip interruption insurance could help you out — even if the airline itself fare will not be refunded to you. Some credit cards will even set you back up to $10,000 per person for covered prepaid travel expenses.
Hopefully these are benefits you’ll never have to use, and you’ll need to pay for your trip with the right credit card to get coverage. But travel protection credit card They can be very handy — and save you a lot of money — if and when you need them.
Think of this situation: You just bought a brand new $600 camera, and three days later you accidentally drop it on the floor. The store you bought it from will not replace it because it was your fault, even though it was an accident. But if you bought the camera with a credit card with purchase protection, your card will actually cover the cost of repairing or replacing the item if needed.
Coverage varies quite a bit between Credit cards offer purchase protectionbut typically you’ll find that most cards offer it which will protect you for up to 90 or 120 days from purchase, and for $500 to $1,000 per item.
In addition to purchase protection, you’ll also find that some cards offer return protection. If you need to return an item but the seller doesn’t take it back, this benefit helps you by refunding you the full purchase price, excluding any shipping and handling fees.
While this is a perk that has disappeared from many credit cards in recent years, if you use a card with return protection, you’ll protect yourself from any problems with merchants with refund policies. pay difficulty.
Finally, a new benefit that has become popular on many credit cards in recent years is cell phone protection. When you have a credit card with mobile protection and you pay your monthly cell phone bill with that card, you get a refund if your phone is stolen or damaged, usually with a small deduction of $25-$50 per claim . And, you can usually use this cell phone coverage up to twice a year, depending on the card.
It is extremely important to be responsible when carrying credit cards. You right Pay your bills in full and on time every month and make sure you don’t spend more than you can afford. If you don’t feel like you have the discipline to do that consistently, then you may find using cash or a debit card your best bet right now.
But if you’re comfortable with the responsibility that comes with owning a credit card, owning and using it can provide you with a multitude of rewards, benefits, and protections. And if you’re not sure which card is right for you, CNN Underscored’s Money Section is the perfect place to learn more about credit cards in general, their unique benefits, and the best credit cards on the market today.
So make 2023 the year to sharpen your financial literacy and decide if a credit card can open up a whole new world for you.
Check out CNN Underscored’s list of best credit card currently available.
Get all the latest personal finance deals, news and advice at CNN Underscored Money.
