Having a credit card is so essential in today’s society. We use them for nearly every major purchase and they are a key component in the building of our credit report—which is a vital document to any and all big financial moves.
Even though credit cards are so common now, many have never obtained their own credit card or are afraid to get another due to a bad experience in the past. When used properly, credit cards can be a powerful financial tool in your day-to-day life.
Max Cash® wants to show you how you can use credit cards to your advantage and, perhaps, even help you find the right unique credit card for you. But before diving into the pros and cons of credit cards, how do they actually work?
How Do Credit Cards Work?
A credit card company offers you a line of credit in the form of a card that you can use to make purchases, do balance transfers, or get cash advances. You are required to pay back that line of credit with monthly payments, of at least the minimum, by a certain due date. Interest is charged to the balance taken up on your line of credit—this is how credit card companies make money off their lending.
Credit card companies usually use your credit score, your yearly income, and other factors to determine approval, the amount of credit, and the annual percentage rate (interest rate).
Use Them on Things That’ll Get You Rewards
Some credit cards offer special rewards and points systems that give borrowers refunds or discounts when expenses are within a certain category or from a particular brand. These perks are great when you do very targeted shopping.
If you travel a lot, then you ought to choose a travel rewards credit card. When you have a really long work commute, you can get a card that gives rewards for purchasing gas. If you eat out all the time, then you ought to get a card that gives you points for eating at restaurants. These are just a few of the reward categories out there:
- Transportation: Gas stations, public transportation, and ride-shares.
- Restaurants: Eating out more could save you money.
- Groceries: Certain cards may give you double points when you use them on groceries.
- Brands: Some credit card companies team up with certain brands. So that you get rewards even faster by shopping at a particular clothing store, hotel chain, or an online shopping platform like Amazon.
- Travel: Nearly every airline out there offers at least one credit card where you can rack up frequent flyer miles. If you use these cards enough, you could end up flying for free!
Use Them on Everyday Items to Get Cash Back
Cashback credit cards are becoming more popular than ever in the USA. It started when Discover offered 1% of your balance refunded regardless of what you used the credit card for. It’s grown and become more prevalent, some cards even offering 2% and 3% now. You can use these cards for day-to-day items and get cash back. Plus, if you pay down the card each month you can negate some of the effects of the interest.
Larger Purchases That You Can Pay Back Over Time
There are certain credit cards out there that give you great starter deals on interest rates, such as 0% introductory interest for the first 12 months. Cards with these benefits can be used to buy that big-screen television or brand-new vacuum cleaner. You can put those larger purchases on one card and then slowly pay it down within the first year without interest.
However, be careful that you aren’t spending more than you can actually afford to pay back. You want to be able to pay down the balance consistently, so it doesn’t start building up over time. Keeping up a habit of paying off the balance will help you earn a great credit score!
Learn More About What to Use Credit Cards for with Max Cash
Max Cash can utilize some basic information about you to find the right credit card for you! We use our financial expertise in order to search for a credit card with the most suitable rates, bonuses, and perks for your unique spending habits.
At Max Cash, we can do the research and comparison shopping for you. Let us get the hard work done and connect you to options. Visit the website or call 833-207-9052 to learn more.
