What are the advantages of using credit cards?

When you’re budgeting for life’s adventures—and the expenses that come along with them—a credit card may be part of the equation.

There can be many advantages to using a credit card, as long as it’s done responsibly. Learn more about how using credit cards might help you earn rewards, build credit, manage your finances and more.

Key takeaways

  • Whether it’s a cash back card, a travel card, a points card or a secured card, there are credit card options to help you finance a variety of lifestyles and goals.
  • The keys to getting the most out of a credit card are making sure you have a card that makes the most sense for you and being sure to use it responsibly by doing things like paying monthly statements on time.
  • Many credit cards also come with additional perks, tools and security features.
  • Getting pre-approved for a credit card might help applicants see what cards they’re eligible for without impacting their credit scores.

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Benefits of using a credit card

If you’re using a credit card responsibly, there are plenty of benefits to having one—from earning rewards to building credit and all the extras that come along with being a cardholder. Here’s a closer look:

1. Earning rewards

Earning rewards can be a great advantage of having a credit card. But with so many different types of credit cards available, finding the right rewards card for you is important. Here are a few types of cards to consider:

  • Cash back credit cards: Looking for straightforward rewards? A cash back credit card might be worth considering. These cards let you earn rewards for everyday purchases like groceries, gas, dining and entertainment. For every qualifying purchase, you earn back a percentage of what you spend. 
  • Travel credit cards: If you’re an avid traveler, a travel credit card might be for you. You can earn rewards miles or points on qualifying purchases. Then you might be able to redeem them for things like airline upgrades, vacation rentals, hotels, rental cars, cruises and more. Some travel cards may let you redeem your miles on things other than travel too. 
  • Points credit cards: Points cards are another type of rewards card. The way points are earned, calculated and redeemed can vary widely from card to card. Some may work a lot like miles cards. Others may function more like cash back cards. If you think a points card is right for you, make sure you understand how the rewards work and any limitations.  

Keep in mind that each rewards card might have different approval requirements, benefits and redemption options. Some cards might have rotating rewards categories. Others might have rewards that expire before you can use them, while other cards offer more flexible ways to earn and redeem your rewards.

So before you apply, it’s a good idea to do your research and compare cards to find one that suits your spending habits and lifestyle.

2. Help building credit

A good credit score can help you get better interest rates for things like car loans, personal loans and mortgages. A good score might even help when it comes to getting certain jobs or renting an apartment.

By using a credit card responsibly, you might be able to build—or rebuild—your credit history and improve your credit scores. Responsible use includes things like always paying your bills on time every month and keeping your credit utilization low.

There are plenty of cards for people who are looking to build or rebuild their credit. One type, in particular, is secured cards.

Secured cards work much like traditional credit cards. But they get their name because they require a security deposit to open the account. Think of it like a deposit that’s paid before renting an apartment. These deposits are usually refundable. But credit card issuers each have their own policies about when and how refunds are given. Secured cards are a great first step into the world of credit cards.

Having your own account isn’t the only way you might be able to build credit. Becoming an authorized user is another. An authorized user is someone who’s been given access to use another cardholder’s account.

Authorized users typically get their own card and can make their own purchases. But the primary cardholder is ultimately responsible for staying within the credit limit and making payments. It’s important to keep a few things in mind:

  • Responsible use by both parties can help the authorized user build or establish credit
  • Negative actions can hurt both the account holder’s and the authorized user’s credit. 
  • Not all credit card issuers report authorized users to credit bureaus
  • If the information doesn’t appear in credit reports, it can’t help build credit.

3. Digital tools and account management

Shouldn’t credit cards be able to keep up with the latest technology? Luckily, the advantages of some credit cards include a wide range of digital access:

  • Manage your account on the go. Your credit card issuer might have an app—like the Capital One Mobile app—you can use to manage your account anywhere, anytime. 
  • Never forget a payment. Having trouble remembering when your payment is due? Easy. All you have to do is set up automatic payments for your account to have it done for you. AutoPay gives you multiple options to decide how much you pay every month.
  • Manage your finances. Digital features like Eno, your Capital One assistant, help keep an eye on your accounts 24/7 and send alerts when something’s up. Eno can also help you keep track of subscriptions, duplicate charges, refunds and more.
  • Monitor your credit. Monitoring your credit is a great way to keep track of your progress and make sure your credit reports are error-free. With digital tools like CreditWise from Capital One, you can access your TransUnion® credit report and VantageScore® 3.0 credit score online without hurting your score. And it’s free for everyone, not just Capital One cardholders.

4. Unauthorized charges protection

Unfortunately, credit card fraud can happen to anyone. But the good news is that many credit cards offer unauthorized charges protection to help you keep your money safer.

Unauthorized charge coverage and security features vary by card issuer. Here are some features and benefits Capital One offers:

  • $0 liability for unauthorized charges: If your card is lost or stolen, you won’t be responsible for unauthorized charges.
  • Security alerts: Get notified via text, email and phone about any suspicious activity on your account.
  • Card lock: Easily lock and unlock your card if it’s misplaced, lost or stolen. 
  • Virtual card numbers: Keep your actual card number to yourself, and shop online more securely with virtual card numbers.

Security features like these can help give you peace of mind knowing your credit card issuer is helping you keep your money safer.

Disadvantages of using a credit card irresponsibly

Credit cards can be a valuable tool when it comes to managing your money and building credit. That’s why understanding how credit cards work and using them responsibly is important.

Making late payments can result in late fees—and, depending on how far behind, even derogatory marks on your credit reports. This will lower your credit scores and impact your ability to qualify for loans and credit cards in the future.

Paying your statement on time every month is only one key to building credit. If you’re able to pay more than the minimum each month, it can help you limit or avoid interest charges on new purchases. And it can help you avoid accumulating more debt than you can handle. 

Another thing to keep in mind: Different transactions might have different rates or fees. For example, a cash advance might not be treated the same as a standard purchase.

Advantages of credit cards in a nutshell

When you understand the pros and cons of credit cards, you can plan for today, tomorrow and the unexpected. But remember, to benefit from all the advantages a credit card can offer, you’ll have to use yours responsibly.

If you’re ready to take the next step and see what you qualify for, explore Capital One credit card benefits and then apply online now for pre-approval without hurting your credit.

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