When to Use a Credit Card

Benefits of Credit Cards

Even though improperly using a credit card can bring about your financial ruin, there are plenty of times in day to day living where using it makes sense. Credit cards are a powerful financial tool in the right hands, and it would be silly to just dismiss them as too dangerous. In this article, we'll go over a few of the most common benefits. Keep in mind that even if a credit card gives you choices like airline miles, free gas, or cash rebates, all of that can be negated with annual fees and service charges. So the first step is to know and understand the terms of your current account. Having said that, let's move on to the positive.

Airline Credit Cards

With the cost of fuel on the rise and airlines dropping out of business so quickly, cheap flights are becoming a thing of the past. As a result, more and more people are feeling the pinch when it comes to booking a flight, whether it be for vacation, work related, or just going home for the holidays. That's a big reason why airline credit cards have seen a big resurgence over the last few years, and why it shows no sign of tapering off anytime soon. If you've got a trip planned in the next year, or are already an avid traveler, it makes sense to charge as much as you can to a card that will repay your loyalty with airline miles. Of course, the golden rule still applies, and that is to pay off your balance every month. Otherwise the benefit of those miles will be for naught.

Gasoline Credit Cards

While not everyone flies, just about all people own a car and drive it regularly. For those folks, gasoline credit cards can be a huge boon. Many banks offer credit lines through popular gasoline chains, and by teaming up, you can not only save on your regularly schedule fill ups, you can also earn points, rewards, and cash back for your trouble. When investigating these kinds of cards, make sure that the chain connected to the account is readily accessible throughout your area. Also consider that while the gas might be cheaper thanks to the means of purchase, if it is still more expensive than the competitor on the next corner, you aren't saving money. For most people, a credit card tied to a chain of gasoline stations is a no-brainer that will net them the equivalent of at least a few hundred dollars a year.

Cash Back Credit Cards

For many years, cash back credit cards were the best option available. While interest rates were high, they offered returns of one, or even two percent on all balances, plus a greater percentage on specific purchases such as restaurants, groceries, drug stores, or other incentives. These days, the numbers are far more bleak. Unfortunately, one percent on general purchases are about all you can expect. This doesn't mean that you shouldn't take on a cash back credit card, since after all, they do provide you the ultimate freedom in deciding how to spend your reward. It's just that if you know beforehand you're more likely to benefit from free air fare, or a cheaper commute, then your efforts are better served by going with one of the previously mentioned cards. No matter what you chose, make an informed decision and you'll likely be happy with your choice.