5 Reasons You Need a Credit Card

Even though credit cards get a lot of bad press when it comes to living frugally, a prepaid debit card offers several positives that make them an excellent financial learning tool. The kicker is that you pay off the balance every month. Failing to pay off your balance every month will increase the interest and negate a lot of these advantages. For those who are financially responsible, here are some advantages to having and actively using credit cards.

Insurance Rates

When you’re ready to get insurance for your car, house, belongings in your apartment or even your new smartphone, having good credit comes in handy. Your insurance provider will take a look at your credit rating in order to determine what kind of offer they’ll give you for your insurance. The better your credit rating the less of a risk you’ll be since individuals with high credit ratings are usually more responsible than individuals who have low credit ratings.

Employment Options

You might be surprised at how much influence your credit rating has over your job options. Potential employers might consider your credit history when trying to decide whether or not you’re a good candidate for a position. Just like with insurance providers, employers also see individuals who have good credit as someone who they can depend on to come to work when they’re scheduled and do their job.

Buyer Protection

Credit cards also come with certain protections that using cash doesn’t. Such protections include identity theft and fraud. While cash is king, it’s a vulnerable king that can leave you wide open to scams.

Renting

Your credit rating can also help you secure your next apartment or condo. You’ll especially want a good credit rating if you plan on moving into a higher end house or apartment. Even if you decide to use nothing but cash to buy your home, your credit rating will still play a part in whether or not you’ll actually close on the house. If you have no credit or poor credit and you’re trying to rent an apartment, you might wind up paying a much higher security deposit than someone with good credit.

Emergencies

If your car breaks down or if you have a medical emergency and you don’t have the money in your bank account to take care of it, a credit card will be your best friend. Rather than having to wait on the repairs to start or get the medical attention that you need, you have to wait until you can come up with the money. If you have a credit card you can take care of the financial emergency then and there.
Credit cards can be of great use to you in various aspects of your life, but you have to make sure that you use them wisely. Use them to fill up on gas or buy items that you would normally buy anyway, just make sure that you pay them off as much as possible before the end of the billing period to avoid paying more interest than necessary.