Some people see credit cards as evil, and a way of life to avoid. When used irresponsibly, credit cards can cause financial problems, but this does not define the phenomenon of credit card use. When you use a credit card as a convenient tool and pay off your balance monthly, there are several advantages to making purchases with credit cards that are not always available when using cash or check.
Security
Credit cards provide a sense of security that cash may not offer. Purchasing with "plastic" can be safer than carrying large amounts of cash around for substantial purchases. Credit cards also limit the user's liability if they are stolen or used fraudulently. Credit cards that bear the user's photograph can serve as an additional form of identification if needed. A credit card also lends a sense of security in the "what if" situations that sometimes arise: the car that beaks down, the emergency room deductible or other unforeseen, big expenses that many people cannot afford on a daily basis.
Streamlined Bookkeeping
Purchasing items on one single credit card can make reconciling bank statements and other bookkeeping tasks more straightforward and streamlined. Instead of gathering receipts from multiple accounts, consumers can keep tabs on their budgets easily and pay one monthly bill. The Colorado State University Extension suggests that people who need to keep receipts to report on their taxes may have an advantage over others who do not use credit cards, if only from the perspective of saving time and effort in gathering materials.
Convenience
One advantage of purchasing gas, groceries, clothing or any other goods with a credit card is that the transaction is easy and convenient. This is especially true of shopping online, says the Indiana Department of Financial Institutions. There is no need to search for cash or to run to an ATM when using a credit account for shopping. Frequent travelers may also see the benefits of credit card use because they do not have to figure out currency exchange rates. When using a credit card abroad, the account is charged in local currency, which is then translated back to the consumer's home currency for billing with the current exchange rate.
Builds Credit Rating
Making purchases with credit cards, whether the card is charged with small, everyday expenses or one-time, large purchases, helps build an individual's credit rating. Using a credit card responsibly and paying monthly bills on time establishes a person as a good credit risk, according to student loan company NellieMae. Good credit is essential for securing an affordable interest rate and payment schedule for mortgages and auto loans. People who use only cash do not have the same opportunity to prove themselves a good credit risk.
Rewards
One of the perks of using a credit card is the rewards consumers reap. Many credit card companies have a loyalty program in place, an enticement to consumers to use their cards. For every dollar charged on the credit card, the consumer may earn points that later can be cashed in for goods and services such as gift cards or merchandise. The reward itself is probably not the biggest advantage for most people who use reward credit cards, but it is a nice perk.
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