Business
Are shopping credit cards worth it?
Personal finance experts spend a lot of energy trying to prevent us from using credit cards—and with good reason. Many of us use credit cards irresponsibly and end up in debt. However, contrary to popular belief, if you can use the plastic responsibly, you're actually much better off paying with a credit card than with a debit card and keeping cash transactions to a minimum.
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Let's examine why your trusty credit card comes out on top, and certain credit card uses and strategies to employ.
1. One-Time Bonuses
There's nothing like an initial bonus opportunity when getting a new credit card. Often times, applicants with good credit or excellent credit can get approved for credit cards that offer bonuses worth upto thousand of rupees in exchange for spending a certain amount in the first several months the account is open.
Other cards entice applicants with bonus reward points or miles that can be redeemed for travel, gifts cards, merchandise, statement credits, or checks (more on those below). In contrast, a standard debit card that comes with a bank checking account generally offers no initial bonus or ongoing opportunity to earn rewards.
2. Cash Back
The cash-back credit card was first popularized in the United States by Discover, and the idea was simple: Use the card and get 1% of your purchases rebated in the form of cash back. Today, the concept has grown and matured. Now, some cards now offer 2%, 3% or even as much as 6% cash back on selected purchases, though such lucrative offers involve quarterly or annual spending caps.The best cash-back cards are those that charge minimal fees and interest, while offering a high rewards rate.Some cards, like the Fidelity Rewards card, offer a high 2% rate of cash back rewards on all spending but you must deposit your cash directly into a Fidelity investment account.
3. Rewards Points
Credit cards are set up to allow cardholders to earn one or more points per dollar in spending. Many reward credit cards provide bonus points for certain categories of spending like restaurants, groceries or gasoline. When certain earnings thresholds are reached, points can be redeemed for travel, gift cards from retailers and restaurants, or for merchandise items through the credit card company's online rewards portal.
Your credit card rewards options are almost endless. Get a co-branded card offered in partnership with a hotel chain, clothing retailer or even a nonprofit organization like AARP, and you can leverage your everyday spending to earn valuable rewards day in and day out.