The lengthy application procedure for a credit card notwithstanding, a credit card is the most convenient source of fast cash finance, but then again, provided you already possess one. A lot of people keep credit cards as a backup plan, a sort of assurance for ready cash, but they ensure to choose a card that has no annual fee or minimum usage stipulations hidden somewhere in the fine print. Others, especially businesses, like to use credit cards because it is an effective and convenient way of accounting for and keeping a track of expenses.
According to reports from TransUnion, over 8 million people stopped using their credit cards in 2009. On the other hand, the number of people using credit cards increased from 70 million in 2010 to over 80 million in 2011. The drop was mostly due to people getting into debt. However, if handled prudently, a credit card can be a great money saving tool and an even more convenient and safer way to spend compared to using hard cash.
Benefits of using credit cards
- To begin with, if you lose your cash, you have lost it for good. If you lose or if someone steals your credit card, you just report the loss and your money is safe – for a nominal fee for re-issuing a new card to you.
- Credit cards can actually help improve your credit score. By not spending more than 30 percent of the card value, or ideally keeping within 10 percent, you can actually maintain your good credit scores and even repair bad scores. Remember, having a good credit history ensures that you get good rates on quick loans and insurance plans. You also earn a lot from card reward programs. Cash and debit cards do not help improve or maintain credit scores in any way.
- If you have used your card to buy a product or pay for a service and you are dissatisfied with the product or service, you can dispute the transaction and have your card company mediate. They usually ensure that you get the product or service or they get your money back.
- Some cards offer a consumer protection system where they replace an item that was lost or was damaged en-route to you.
- Many credit cards come with complementary insurance policies that cover accidents and even life.
- Some people love the convenience of having to pay with cards. The billing and payment is automatic and secure.
- Cards offer reward points for every dollar spent. This could add up to a lot of cash at the end of the year.
- In addition to reward points card users get discounted and even free airline tickets, gift cards and merchandise in addition to discounted holidays with free hotel rooms.
Especially good for businesses
Businesses issue cards to travelling executives who use it to pay for travel expenses and accommodation. This does away with the concept of “petty cash.” What is more is that the company has every penny accounted for in the statement, saving on time and effort of the executive by not having to make out a “tour bill.”
However, credit cards are a great source of cash finance but are not for those who cannot control their spending. Such people not only give a bad name to credit cards but they also get themselves into a whole lot of trouble because they used a good thing in the wrong way.
John Smith is a professional content writer for one of Australia’s fast growing finance lenders, Cash Finance.