How Credit Cards Can Help You Get Ahead Financially

In a world where debit cards and cash purchases can secure purchases of any cost, it’s easy to forget the usefulness of credit cards.

But when used for the right reasons, credit cards can actually be a great way to help you stay on top of your finances and spending.

Here are six helpful ways a credit card can help you build your financial stability:

1) They help you build your credit score

Credit cards are one of the easiest and fastest ways to build your credit score.

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A credit score is a three-digit number that lenders use to measure how likely you are to repay a loan. The higher your credit score, the more likely you are to be approved for a loan and to get a lower interest rate.

To check your credit score in Australia, you can use a credit monitoring service for a full report of your credit status. Check your credit score with ClearScore.

Credit cards can help you improve your credit score by showing that you’re able to handle borrowing money and repaying it back on time.

If you want to take out a mortgage or loan in the future, having a good credit score will make the process much easier.

2) They provide reward programs

Credit cards often come with reward programs that give you points or cash back for every dollar you spend.

This can be a great way to save money on your regular expenses, such as groceries, petrol and bills.

For big purchases, such as airline tickets, kitchen equipment, and television sets, credit card bonuses serve as another method to get large discounts too.

The usefulness of credit cards also extend to sign-up bonuses, such as a percentage of cash back or bonus points, when you sign up.

Make sure you shop around to find a credit card that offers good rewards programs and suitable bonuses.

3) They protect against identity theft and fraud

Unlike debit cards, credit cards offer protection against identity theft and fraud before you make a purchase.

If your credit card is stolen or used without your permission—say through an online purchase—your card provider may put a hold on your credit card to investigate the matter.

This can be a lifesaver if your wallet is stolen or if someone manages to hack into your account. If your credit card company has a zero-liability fraud policy, reporting the fraudulent purchase will protect you from losing any cash.

Regardless, make sure you report any lost or stolen cards immediately to prevent any fraudulent activity from affecting your finances.

4) They work everywhere you are in the world

Credit card brands like VISA and Mastercard are accepted in more places than debit cards. Unlike cash, you don’t have to go through the hassle of changing currencies every time you touch down to a new country.

If you travel a lot, or if you have a family member who travels often, having a credit card can make life much easier. You don’t have to worry about exchanging currency or bringing a large stash of cash with you. Credit cards also don’t come with lower fees since you don’t need to exchange them anywhere.

Just make sure you keep track of your spending and don’t go over your budget while you’re on holiday.

5) They have fewer fees than debit cards

While debit cards have overdraft charges or fees every time you buy something, credit cards generally don’t have these.

This makes them a much more affordable option for regular purchases, especially if you purchase a lot of items throughout the course of the year.

There are, however, some credit cards that do have annual fees so make sure you read the terms and conditions carefully before signing up.

6) They track your spending for you

Most credit card providers have an online database that tracks all of your purchases.

This can be helpful if you’re trying to stick to a budget or if you want to keep track of your spending over a period of time.

This feature is especially helpful when you have to file your taxes since you can print out a report of your expenses for the year from this one place.

Tax-deductible activities like business expenditure and donations can be compiled in these credit card statements as well, so keeping track of them is a good way to stay organized.