Credit Cards Still Have Benefits
In the present economic climate, just mentioning the words ‘credit card’, sends people off talking about the ‘credit crunch’, and how we should all be more careful when it comes to using our credit card. Well, credit cards can be a good friend (even a flexible friend) to you in certain circumstances.
Emergencies
As my dear old daddy used to say, “always expect the unexpected’, and I do, especially where money or monetary transactions are involved. I have just been reading about a couple of tour operators going bust, leaving hundreds of people stranded in various airports around the globe. Now you might be one of the few people that actually like airports, but like most of us, I hate them, and the idea of having to wait around an airport for longer than a few hours does not appeal to me at all. And what if you were one of those unlucky people that were thrown out of their hotel because the tour operator had not paid the bill. At least if you are carrying plastic you could find another hotel or arrange for a flight home for you and your family, without a credit card, I shudder to think of the consequences. And what about those of us that like to go on an overseas touring holiday in the car, imagine the situation, driving along with your wife in the passenger seat taking the surrounding views, kids in the back also looking around, when clonk, clonk, clonk, the sound of something metallic (and no doubt expensive) comes from under the bonnet. At least with a credit card you can arrange repairs and a bed. Whilst some insurance policies offer this protection, it may well be a better bet to pay now and claim it back later rather than going through the hassle of trying to persuade some French mechanic that your insurance company will pay the bill.
Protection against faulty goods or services
Goodies that come with a credit card
Many credit cards give the user a number of ‘so called’ free offers, from air miles that can be exchanged for airline tickets, to points that can be exchanged for certain luxury goods or services. Other credit card providers offer a free extended warranty on household appliances purchased using their card. Other incentives offered by credit card providers include travel insurance, cover for the theft of items bought on the card within 90 days of the purchase, and even free entrance to certain places of interest.
Moneyback or cashback
These types of credit card offer users a percentage of the money they spend back in cash. Beware though, that to be eligible for your ‘cash back’ you have to pay off the outstanding amount every month. If you do not, you will end up paying out more money in interest, than you receive in cashback repayments.
Increasing your credit rating
Now, everybody has to start somewhere, but the providers of credit do not seem to realise this. Everyone from a mortgage provider to a mobile phone provider wants to know your credit rating before they will commmit to any transaction, and the lower your credit rating, the less lightly the chance of being accepted, and if you are accepted it will cost you more money than if you had a high credit rating. Even if you do not use it very often, having a credit card and making a few purchases with it will help you grow your credit rating. However, you must pay off the outstanding balance to avoid any interest charges, and before too long, you too will be the proud owner of a high credit rating, and lenders will be falling over themselves offering you credit.
(Hang on a minute, isn’t that how the credit crunch started in the first place?)
