A lot of people still use cash or debit cards to pay for everything they buy, either because they’re not used to it, they don’t understand how it works, or they just don’t want to take the time to change their routine.
But every time you make a purchase with your credit card, you get something in return — or at least if you use a correct credit card. Many credit cards offer rewards like cash back or airline miles, while others have features that help you pay off existing debt or finance large purchases over a period of time without paying interest.
Some credit cards offer travel protection if you have a problem while traveling, purchase protection if something you buy happens to break the next day, and even phone protection if your phone is damaged or stolen.
There are many benefits to owning a credit card, so 2023 should be the year you put away your debit cards and start using one that pays you back. With these six reasons to get a credit card for the New Year, let’s take a look at what you’re missing out on when you’re not using a credit card.
One of the best things about using a credit card is that, with most credit cards, you get rewards on every purchase you make. The most common reward types include cash back or travel credits or miles, but there are other options as well.
Merchants generally won’t charge you more for using a credit card instead of cash or debit to pay for your purchases, and you’ll never pay interest on your credit card as long as you pay your bills in full each month. This means that if You got it right, there is absolutely no reason to leave money on the table with a debit card when a credit card can give you something for free.
Some credit cards even offer what we call “reward categories.” That means on certain categories of purchases — such as groceries, food delivery, or even just filling up your gas tank — you can earn extra rewards every time you use your card.
Not every credit card has an annual fee, but some popular ones do, so you’ll want to weigh the cost of the card against the rewards you’ll earn or other benefits of the card. But there are many highly recommended credit cards with no annual fee and rewards that are truly free.
In addition to the rewards you’ll earn on all your purchases, many credit cards offer some pretty solid sign-up bonuses. This means that just by applying for a credit card and spending a certain amount (called a “minimum spend”) within the first few months of having the card, you can immediately earn a big reward to get you started in the right direction.
Many travel credit cards offer great benefits that can make your trip even more enjoyable. These perks can include anything from elite status at a hotel to access to exclusive lounges at airports around the world.
Other credit cards reimburse you for certain purchases, such as credit when you spend at specific restaurants or certain food delivery services, or when you apply for travel programs like Global Entry or TSA PreCheck or use airline credit for checked baggage Credit card for luggage.
You’ll even find some credit cards that offer nightly reward certificates for free hotel rooms, or give friends the chance to travel with you at a steep discount. So simply owning a particular credit card can provide experiences you might not otherwise have—and even save you money.
Of course, travel credit cards with all these perks often come with an annual fee—sometimes a hefty one. But if you do use all the benefits, you’ll find that you get more value out of them than the annual fee you pay for the card.
If you’re already in debt from past credit card usage or some other loan, and the interest on that debt is making it difficult for you to get out financially, having a credit card that allows you to consolidate your debt could be the best New Year’s Eve A gift you can ask for.
Some credit cards, when you first get them, offer what’s called a balance transfer introductory rate. This means that if you transfer your existing debt from another credit card or other type of loan to your new card, you will not pay interest on that debt for a preset period of time (usually 6 to 21 months) .
Depending on how much existing debt you have and your current interest rate, this could mean substantial savings. For example, if you currently pay 15% interest on $4,000 of credit card debt, and you transfer that debt to a 0% interest balance transfer credit card for 18 months, you will save up to $900 in interest over those 18 months debt. Instead of watching it disappear to pay interest, you can use that money to pay off what you owe.
In order to transfer an existing balance to a new credit card, you will usually incur a fee – the current standard is 3%. But you can save even more by avoiding the sky-high interest payments you’re currently paying on your debt so you can pay it off faster.
In addition to credit cards that offer introductory rates on balance transfers, some credit cards also offer introductory rates on new purchases.
When you first get a credit card with an introductory shopping rate, for a preset period of time (usually 6 to 21 months), you pay no interest on anything you buy with the card. This means you can afford to buy a large purchase in one go, such as an engagement ring, and pay for it in installments without accruing interest.
Now, going into debt is one of the big dangers of using a credit card, so it’s never a good idea to use an introductory offer on a purchase for something you can’t afford and can’t pay off in time. Because once your new card’s introductory period is over, the interest rate on any remaining debt jumps to sky-high rates, making it hard to pay off.
So while it can make sense to use an introductory offer when buying to spread the cost of a large expense, or to get you through a short period of time during tough times, you should plan ahead so you know how you’re going to pay for what you have owe, and only buy what you can eventually afford in the long run.
If you’re planning a trip in 2023 or beyond, many credit cards offer a package of travel insurance benefits. These protections can keep you covered should the unfortunate event happen before, during or even after your trip.
Some typical travel protection benefits include trip cancellation and interruption insurance, trip delay insurance, lost luggage compensation, baggage delay compensation, rental car insurance, travel accident insurance, and emergency evacuation insurance. Not every credit card has all of these benefits, and the type of protection that will be most useful to you will vary depending on your situation.
For example, if you get sick before the trip is covered and are therefore unable to travel, trip cancellation and interruption coverage on your credit card can help you — even if the airline itself won’t reimburse you for the ticket. Some credit cards will even reimburse you for up to $10,000 per person in prepaid travel expenses.
Hopefully, these are benefits you never have to use, and you need to pay for your trip with the correct credit card to be covered. But credit card travel protection can come in handy — and save you a ton of money — if you need it.
Consider this scenario: You just bought a brand new $600 camera, and three days later you accidentally drop it on the floor. The store you bought it from won’t replace it because it’s your fault, even if it was an accident. However, if you purchased that camera with a credit card that offers purchase protection, your card will actually pay for the repair, or replacement of the item if necessary.
Credit cards that offer purchase protection vary widely in coverage, but you will generally find that most credit cards that offer purchase protection will cover you for up to 90 or 120 days from the date of purchase for up to 500 per item Between US$ and US$1,000.
In addition to purchase protection, you’ll also find that some cards offer return protection. If you need to return an item and the merchant does not return it, this benefit will help you by reimbursement for the full purchase price, excluding any shipping and handling charges.
While this is a benefit that has faded from many credit cards in recent years, if you use a card that offers returns protection, you’ll protect yourself from any issues with merchants with difficult return policies.
Finally, a new perk that has become popular with many credit cards in recent years is cell phone protection. When you have a credit card with Cell Phone Protection and use it to pay your monthly cell phone bill, you’ll be reimbursed if your phone is stolen or damaged, usually as little as $25 to $50 per claim Small deductible. And, you can usually use this cell phone coverage up to two times per year, depending on the card.
It is very important to be responsible when carrying credit cards. you must Pay your bills on time and in full every month And make sure you’re not spending more than you can afford. If you don’t feel like you’re disciplined enough to do this consistently, you may find that using cash or a debit card is your best bet right now.
But if you’re comfortable with the responsibilities that come with owning a credit card, getting one and using it can bring you tons of rewards, benefits, and protections. If you’re not sure which card is right for you, CNN Underscored’s currency section is the perfect place to learn more about credit cards in general, the individual benefits of each, and the best credit cards on the market today.
So make 2023 the year to sharpen your financial literacy and decide if a credit card could open up a whole new world for you.
View CNN Underscored’s list best credit card Currently available.
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