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  • Five Top Benefits of Using a Credit Card

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    Using a credit card has many benefits, including zero interest on purchases for a period of 30 days, no cash advance fee, and grace periods for payment arrangements. The card is best for paying off the balance as much as possible each month. Additional benefits include extended warranties, return and purchase protection, rental car insurance, and travel insurance. There are also a variety of rewards programs available. While these can be worth the fee, they are not a necessity.

     

    1. Convenience

    Many people use a credit card more frequently than they do cash. This is partly due to the convenience that using credit cards offers, as it is not necessary to carry cash around. Another reason may be because consumers want to earn rewards from credit card companies, such as cash back. Some customers also prefer to purchase goods from stores that accept credit cards instead of cash. The following are some of the reasons why convenience users prefer using American express gold benefits over cash.

     

    When you purchase an item from a store that accepts credit cards, you may notice that the cost of the item is higher than when you use cash. This is due to the fact that merchants generally add convenience fees on top of prices. In some cases, merchants may also charge surcharges for credit card transactions, which are discouraged by most issuers. For example, Visa requires merchants to post signs at the point of sale so that customers are aware of any surcharges.

    2. Safety

    One of the safety benefits of using a credit card is the lack of risk associated with receiving contaminated bills as change. Since most credit card transactions do not involve the touch of a cashier, the risk of receiving contaminated bills is essentially eliminated. Touchless pay systems are becoming more common. Additionally, the COVID-19 pandemic is still in full swing, making it more important than ever to use a cleaner method of payment. Besides the safety benefits, using a credit card can also increase your financial security, so it may be a worthwhile investment to make the switch.

    3. Rewards

    Rewards from credit cards are valuable, but they come with a few caveats. Some have a long expiration date, meaning you can't use them if you don't pay your bill. Other rewards are only good for a short period of time, such as two billing cycles, but some will expire immediately upon account cancellation. To maximize your rewards, keep your account open for at least one billing cycle before you decide to redeem them.

     

    The most common method of redeeming rewards is statement credits. These rewards are applied to your monthly statement and reduce your balance accordingly. So, if you spend $150 a month, you would receive a credit of $50. However, not all cash back credit cards will work this way. They may come in check or bank account deposit, gift cards, or travel. Redeeming rewards depends on the type of card you have, so choose carefully.

     

    4. Payment cycle

    If you're looking to boost your credit score, you should use the credit card payment cycle to your benefit. Credit card companies allow you to carry an interest-free balance for 21 to 25 days after making a purchase, depending on the credit card issuer. Cash advances, however, start accruing interest charges immediately. Therefore, it's vital to pay your bill as soon as possible to avoid incurring interest charges on your purchase.

     

    The billing cycle starts on the day you activate your card. Often, there is an upfront fee associated with activating the card. From that day forward, all transactions on your account will be added to your statement. The next statement will reflect the balance you owe. You can use this cycle to your advantage and reduce your credit card bill by paying off your balance in full each month. It will also help you stay in control of your spending and avoid the stress of paying for things you don't need.

     

    5. Interest rate

    A credit card's interest rate depends on several factors, including the amount of outstanding debt and the borrower's debt to income ratio. Generally, credit card issuers offer varying rates based on the likelihood that a borrower will default on a loan. The APR is a measure of the borrower's risk, and the higher the risk, the higher the interest rate. However, there are some cases where the interest rate is fixed, so you should always check the fine print before committing to a balance transfer.

     

    When using a credit card, you should first understand the APR. APR stands for annual percentage rate, and it indicates how much you'll owe in interest each year if you have a balance of $1,000. With this rate, you'll pay $200 in interest over the course of a year. Most credit cards have variable APRs, so make sure to check the terms before making a purchase.

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