May 22, 2012

When Credit Cards are a Great Idea

We've all heard plenty of cautionary tales about overusing credit cards, but there are times when using a credit card is not only convenient but actually conducive to personal budgeting. When used wisely and under certain circumstances, credit cards can be an important tool in building a secure financial future. Here are a few reasons why using a credit card may be to your advantage.

Safe and Secure Transactions

When making large purchases, consumers generally prefer using a credit card rather than cash or personal checks. Likewise, internet shoppers also prefer credit cards for their transactions. The reason is simple. Credit cards offer protection and security services that aren't available in other payment forms. Credit cards also offer bona fide proof of the transaction, in case returns or refunds need to be made.

Legally, credit card users are protected, up to a certain amount, on all purchases. Having this type of protection means that if your item isn't delivered and if the seller has suddenly disappeared overnight, you'll be able to file a claim and get your money back.

This protection also applies to deposits on large items. If you've put down a deposit on a car or a vacation and the seller disappears, you'll be able to get your money back as long as the deposit was made on a credit card.

Overseas Travel

Seasoned travelers know that you're apt to get a much better exchange rate when you're converting to foreign currency. If you've ever tried to convert cash abroad, you probably had to pay exorbitant fees at the bank or cashier's kiosk where you changed your money. By using your credit card, you'll be able to avoid these fees as well.

Credit cards also offer theft protection, so if your card is stolen, you can report it and get immediate help from the credit provider.

Financial Control

Using a credit card can actually help you to better control your finances, especially if you've shopped around to find a card with the best interest rates. If you use a card that offers a zero interest deal for a limited time, you can spread your payments out in a time frame that works best for you; just make sure to budget your payments so that the purchase is paid off by the time the interest rate gets higher.

If you're not able to pay off the card within the zero interest time frame, you should look for a similar deal on another card and transfer your balance to the new card. This will give you the extra time you need to pay off the balance without having to pay interest fees as well.

When Should You Not Use a Credit Card?

Although credit cards can be extremely beneficial to helping you gain financial control, there are times when credit cards may be a hindrance rather than a help. If your finances are spiraling out of control and you're already in over your head, it's better not to open up a new account; you'll just be getting further in debt.

Likewise, for inexpensive purchases where you've got the cash on hand, it's sometimes better to pay in cash; otherwise, you'll be paying huge interest fees for small transactions.

When used wisely, credit cards offer security, convenience and a certain level of financial control. If you've done your research and looked at Money Supermarket credit cards and other alternatives, you'll know that credit cards can be used safely and securely and can also be used to your own personal financial advantage.

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