What is the purpose of having a credit card ?

Question

I don't get it ... don't we loose money by paying with a credit card ?

Answer 1

I basically pay for all of my expenses (gas, groceries, utilities, restaurants, etc.) with credit cards so I can get about 3% off all of my expenses (in cash back rewards or gas card rewards).

I just pay my balances in full every month to avoid interest.  So I pay no interest and rake in the rewards.

Plus, for super-convenience, I pay my other credit cards with the Fidelity Signature Rewards Visa card.  It's easy and that way I get 2 months of "float" -- during which my money is sitting in a high-yield money market account (that float earns another $100-$200 in interest each year).

You can use this rewards calculator to see which credit card or combination of cards will pay you the most in rewards (and how much) for your normal expenses:

http://www.creditcardtuneup.com/

If you happen to be a college student, you can use the student rewards mode of the calculator:

http://www.creditcardtuneup.com/?card_ty...

I really wish I were a student so I could get the Citi mtvU card, which is the *only* rewards card that pays 5% rewards at restaurants, book stores, movie theaters, and video stores.

Answer 2

it's like a juggling act...if you can pay off your balance each month, then you won't lose. you really have to have self control and keep track in your mind what you buy and prioritize.

but even if you do purchase something you can't pay off in one month, you still have the convenience of enjoying use of that item or service when you need or want it. it's especially a big help when traveling overseas.

Answer 3

Convenience. I have several credit cards and use them all the time. I pay them off every month.

I haven't paid a penny of interest in many years, but I do get cash back from the credit cards for the purchases I have made.

They are great for responsible people.

Answer 4

build your credit

Answer 5

You don't always lose money on it. If you're a student, chances are you can get a 0% interest credit card.

They're great for big purchases that you don't have the cash for at the moment, but will have enough by the end of the month to pay it off. I use mine to buy gas and groceries because those are smaller things that I know I can afford easily. Using it and making payments helps build up credit.

You'll encounter many needs for credit in your life-- Anything from applying for an apartment, loan, or home mortgage. The better your credit score, the better deal you may get in banking.

As long as you keep paying your bills on time, you shouldn't have any problem with getting into debt. The key is to be responsible with your spending habits.

Answer 6

It is very convenient and it also builds your credit which you will eventually need.

Answer 7

The purpose of having credit, is to teach responsibility when borrowing someone else's money, to build credit, and to develope a score that will get you the best rates on on any kind of loan in the future from cars, to personal, to home, etc...

Answer 8

Why do you want a credit card?

Because you can. It is convenient. And you want points or cash back.  It pays you to use a credit card.

Answer 9

While some preach that credit cards and the like are bad, the reality is without a credit history you have slim to no chance of getting a mortgage, an auto loan or financed on anything.

You never lose money if you're smart about how you handle credit.  The fact is, with good credit you get even more.  How?  Rewards!

I pay mine off in full every time I make a purchase.  I never ever carry a balance on a credit card.

I never charge more than I can afford to pay off completely within 30 days even though I have a high credit line.  Just because the bank is willing to give me 5k on a credit card does not mean I will ever use it all.

I use them strictly for rewards or excellent financing!

People who have no self control, or do not see that their future will be destroyed if they misuse credit, should NOT get credit until they educate themselves about it.