The main benefit to getting a credit card is the instant loan you get to buy things you want. When you buy something on credit, the credit card company is loaning you the money until you pay them back. You can pay either the minimum balance or the entire balance. If you only pay the minimum, you will have to continue to pay an interest rate on your balance. If you always pay off your balance every month, you are actually getting an interest free loan.
On top of the obvious benefits of owning a credit card, cards today offer many more benefits. The next kinds of benefits are payment benefits. They benefit you by charging you less to own the card. These include cards with no annual fee, a low APR or 0% APR for a certain amount of time, and a low APR for balance transfers. Though these don’t sound as glamorous as cash back or rewards, they can save you a lot of money. If you are worried that you will end up carrying a balance on your card, you should try to get a card with the lowest APR as possible.
The more outward benefits are from rewards programs. Almost every credit card company has its reward program. There are many programs that reward a point or more for every dollar you spend. These rewards can be redeemed for travel, restaurants, gift cards, gas, and other merchandise. Often there are bonus points such as when you first apply for a card. The more you spend the more points you receive. Travel cards reward dollars spent with miles. This works similar to points, only you redeem them for flights.
Another common reward is cash back. Some cards will give you a certain cash back percentage on all purchases such as 1% or 2%. Others will give you a higher percentage on certain goods or services and a standard percentage on everything else. For example, you might be able to 5% cash back on all gas and automobile upkeep purchases and 1% cash back on everything else. This is a great benefit because it is like getting an instant discount on everything you buy.
Remember, none of these bonuses will benefit you if you don’t use your credit responsibly. If you charge a lot to your card but pay off your balance every month, you will get the full benefit. You won’t have to pay any interest, and if it’s a $0 annual fee card, you won’t have any fees either. In this case, if you have a cash back card you will actually be making money. Don’t hold a balance, and you can have many more great shopping experiences.