The Power of Credit Cards

4 min read By eCompareMo on November 6, 2014

Credit card is a powerful financial tool that allows a person to make smart financial decisions. By acting as a tool that allows a person to borrow money from the bank at a point of purchase, credit cards can mean both convenience of making cashless transactions. However, there’s more to credit cards than having the ability to swipe off payments easily. To understand the power of credit cards and how you can use them to your advantage, here are a few things you will help you decide whether or not to apply for credit card.

Read: (All Your Burning Questions About Credit Cards, Answered)

Signup bonuses
Credit card issuers come up with different promotions to entice people to finally get a credit card. The most common way banks lure people is the signup bonus. Usually, credit card signup bonuses can be one of the following: cashback on first few purchases, multiplied rewards points in the credit card for the first month, and other promos that can convince potential cardholders to apply for a credit card.

Cashback/rebates
Some credit cards give back a small percentage of the amount they previously purchased, usually transferred in a tied savings account. Also known as cashback or rebates, there are credit cards that offer cashback as much as 3% for all purchases. Meanwhile, there are specialty credit cards that offer rebates on particular purchases such as gas, grocery, or clothes.

Frequent flyer points/miles
There are credit cards on the market that allow people to earn miles that can be exchanged for airline tickets. Some credit cards allow cardholders to earn miles by making purchases, while some co-branded credit cards go beyond the usual miles by offering discounts for airfare tickets, advance notification of seat sales, and other perks.

Rewards points
Depending on the type of card issued to the cardholder, using certain credit cards rewards programs which allow cardholders to earn points that can be used as an alternative means to a cash payment on retailers specified on the credit card. Most points can only be redeemed at retailers in partnership with the credit card issuer, so better find out which credit cards companies are affiliated with your favorite retailer.

Safe payment options
Although not airtight, credit card companies employ the highest security measures to protect the customers from fraudulent activities. In the case of unauthorized use of credit cards, banks will investigate the incident and reverse the transactions made by fraudsters. Furthermore, credit cards allow cashless payments to be possible, eliminating the risk brought by carrying physical cash.

Freebies
There are many ways credit card companies reward their customers for continued usage of their cards, and one of the most enticing loyalty programs offered by banks is freebies. Most credit card companies provide free products and services depending on the type of card issued, such as free roadside assistance for automotive credit cards or free upgrade of hotel rooms and airline seats for platinum cardholders. Check with your credit card provider to know more about freebies tied to your account.

Grace period
Credit cardholders who pay their balance religiously can take advantage of the credit card’s floating period, which also known as the grace period. In this scheme, cardholders can avoid paying interests on their transactions as long as they pay them before the due date. To fully take advantage of the grace period, experts suggest using the card right after the billing cycle of the previous month ends, thus maximizing the grace period for up to 45 days. To understand more about the grace period, check out this infographic explaining credit card float.

Read: (5 Best Credit Cards For Rewards)

Universal acceptance of payments

Credit cards are critically accepted as a standard form of payment in many establishments—all around the world. In the same breadth, many shops—both online and in real life—only accept credit cards as a form of payment. Since credit cards are universally accepted, cardholders can use their cards even when overseas to make transactions.

Insurance
More common among traveler credit cards offer an added layer of protection to their cardholders. Traveler credit cards offer insurance to their cardholders who going abroad, which goes higher as the card level increases, while there is free travel insurance given when you purchase airline tickets using certain credit cards.

Credit score
A person’s credit score refers to the creditworthiness of a person, thus making it easier for banks to evaluate whether or not he is capable of paying off debts. When cardholders use their credit cards responsibility—which includes avoiding late payments and having outstanding balance—their credit score increases. Having a positive credit score means lower interest rates, fast credit card application process, and more lenient policies from banks.

There are many ways people can harness the power of credit cards. While credit cards have many advantages, keep in mind that cardholders should use their credit cards responsibly. Find the best credit cards promos at eCompareMo – we compare and you choose.