Credit cards certainly have advantages to them, and there are a number of ways they can be useful, as long as they are used responsibly. Credit cards extend credit to those who have a good credit rating, and historically have shown a responsible and mature use for them. So what are some practical and economical uses for credit cards?
If one travels a lot, arriving at the destination means needing transportation. Many business travellers use rental car companies, and rental car companies usually demand a credit card for the rental of the vehicle. This is a use that is very advantageous for the credit card holder, as all the car renter has to do is give the rental car agent their credit card (which needs to be in good standing, such as having available credit on it), and the rental car company will use that as collateral so that the renter can rent the automobile. The credit card company will even provide a basic insurance coverage so that the renter doesn’t have to purchase extra coverage! This is an extremely popular use for credit cards, and one that takes a lot of hassle out of traveling and renting vehicles.
Another great use for the credit card is using it when dining out. Most business people use credit cards for this activity, as carrying a lot of cash might be cumbersome and risky, especially if traveling in an unfamiliar region of the country, or world. Another advantage for the credit card user is the ease in which expenses can be tracked, as the monthly credit card statement lists all activity for the previous month. This makes the job of keeping track of expenses a lot easier, not only for the business person, but for the company the business person works for.
Carrying credit cards is a safety feature as well. If a person has the unfortunate experience of getting robbed, and is holding cash, then there is no way to retrieve that cash. It’s gone forever for the most part. But carrying a credit card enables the card-holder to call the credit card company, explain the circumstance, and the credit card company will automatically freeze or cancel the card. So there really is no liability for the card holder, and that is great benefit!
These are some practical and economical uses for the credit card holder, and for these benefits and others there is an interest charge applicable if the card-holder decides not to pay the bill in full every month. For those folks that do pay the bill entirely every month, there is no charge at all. Different credit card companies have different policies, such as an annual fee, or perhaps a higher interest rate, so it behooves the credit card applicant to check out the different promotions and benefits for the various types of credit cards on the market.
As long as credit cards are used responsibly, they can be a great boon for the personal user, as well as the business person. It’s those folks who abuse credit cards by overcharging that can get into trouble, and usually that means getting into debt.
Sources: Wikipedia, Wall Street Journal