Using Your Credit Card For All Your Purchases
There was a time when people paid for everything using cash. Other payment methods were used for rare and big buys. There has been a paradigm shift in the way people spend today. Credit cards have become ubiquitous and are used everywhere, to the extent that today we have become an “almost cashless” society. This is why you need a merchant account to process all card payments you may receive in your business. http://www.ultimatemerchantproviders.com/ can be a good place to start the hunt for such services.
Some of the benefits of turning to plastic
Security: Credit cards are easy to carry and safe too. Your money will be irrecoverable if you lose your purse or you are robbed. However, if your credit card is stolen or lost and if someone makes purchases on your card, you will not be responsible for those buys. Although it will take a while to sort out the mess, you will not actually lose your money.
Debit cards are also risky.
When your credit card is used for fraudulent purchases, the money is lost by the issuer of the card. However, if your debit card is used to make fraudulent purchases, the money spent is your own money from your bank account. If the fraud is reported right away, you may be able to eventually get back your money. It may be some time before things are sorted and while that is happening, you may face problems like bounced cheques, payments that have been automated refused due to lack of funds and you may have a tough time paying your bills.
Tracking: No matter in which way you incur expenditure, keeping a track of your budget can be quite a challenge and keeping tabs on where the cash is spent is even more difficult. This can become especially difficult if you misplace an invoice or receipt and there is no record of your expense.
In the case of credit cards, you have all your expenses listed out on the monthly statement and you can easily make a budget by importing all the information from your bank accounts and credit card statement onto a budget app. This will help you allocate each of your expenses to a budget category and check on what you are overspending and what expenses you can cut out.
Rewards: Whenever you spend on your credit card, you get rewards and this can be quite attractive and in fact be a motivation to use your credit card more. For every purchase you make you may get points, miles that you can cash in for hotels or travel or even cash back options. Make sure that you don’t end up spending over your budget just to get these additional rewards. A few points or some cash back cannot make up for the extra amount you will end up spending. Also, if you carry forward the balance on the credit card from one month to another, the interest that you will pay on the outstanding amount will cancel the value of the rewards. So, it is a good idea to try and pay the full balance amount at one go.
Building Credit:To have good credit, there is no need to own a credit card. However, using your credit card carefully can be the best way in which you can improve your credit scores and having good credit can be beneficial in many ways. Whether you are applying for a loan or renting a home where the landlord checks your credit before handing over the house keys to you, having a good credit helps. Utility companies, cell phone providers and insurance companies may also make use of your credit history to decide the rates and also your eligibility.
If you do own a credit card, by making small purchases on the card regularly, keeping your outstanding balance low and making bill payments on time can increase your credit score.
When should you not use a credit card?
When you want to curtail spending: You may find that you cannot control your spending when you own a credit card, especially if you have a high credit limit. If you do not want to end up with a large outstanding credit card balance or you are very close to your credit limit, it may be a good idea to use your debit card or cash for your purchases.
If you have to pay an extra fee: Every time you pay with your credit card, the merchant pays a processing fee which they account as the chargefor doing business. However, sometimes you may be asked to pay this fee by the merchant as a convenience fee or a surcharge that increases the cost of your purchase and you end up spending more than what you planned.
There are many advantages of using credit cards for all your purchases. The important thing to keep in mind is that you should be able to spend wisely irrespective of the payment method you select.