Maybe you don’t think you need a credit card because you aren’t spending outside your means. While that’s a reasonable financial plan, having a credit card has a lot of benefits that don’t just involve getting into debt. If you’re not convinced, here’s five reasons you might consider having credit card even if you won’t be running a balance.
1. Build your credit rating. If you’re looking to make a big purchase — like a home or a car — your financial institution will look at your credit rating to determine whether they should lend you money. Without a credit card, your credit history could be pretty sparse — but if you have a card that you make regular purchases on and pay on time, your credit rating will shine.
2. Convenience. Sometimes it’s just easier to put a large purchase on credit instead of having the money come out of your account immediately. Even if you pay off the balance in full at the end of the month, a credit card gives you some extra financial leeway where spending is concerned. And if you need to, a credit card gives you the flexibility to pay a big purchase off over several months.
3. Make emergency purchases. No matter how carefully you save, you could run into an emergency that requires you to spend a lot more money than you planned — like a car accident or a health problem, both of which can turn into big bills. A credit card can get you out of the financial bind an emergency might put you in by letting you spend what you need to spend and pay it off later.
4. Spend safer. With a debit card, money comes out of your account as soon as a transaction occurs — but with a credit card, money only comes out of your account when you pay the bill every month. This distinction means that a credit card can offer you more secure shopping, because if your card number is ever stolen, your bank account won’t get wiped out by it before your financial institution can step in and fix things — even though most financial institutions don’t hold you liable for fraud committed with with your card, they’ll have to refund money drained from your account instead of just removing charges on your credit card bill. Some cards will also offer additional protection from identity theft or offer extended warranties for purchases.
5. Earn rewards. There are many cards available with rewards programs that allow you to earn bonuses just by doing your regular spending. A savvy shopper can turn these points into cash, vacations, or shopping trips — and who wouldn’t like getting some extra bonuses from spending they’re already doing?
Of course, if you’re the sort of financially-minded person who’s avoiding getting into credit card debt, if you do pick out a card, you’ll want to look for one that won’t get you in over your head — but you have lots of options that can offer a decent line of credit without weighing you down with fees. If we’ve convinced you to look into adding a credit card, check out the PenFed Promise Visa Card, which doesn’t have any of the fees that are common on other cards — ideal for anyone who’s trying to save for a rainy day!