Image

5:31 AM / Monday October 26, 2020

16 Oct 2020

Pros and cons of using credit cards today

  • Facebook
  • Twitter
October 16, 2020 Category: Color Of Money Posted by:

BPT

One of the many changes spurred by the COVID-19 pandemic is a fundamental shift in how people are paying for the goods and services they need. Due to both health and safety concerns, consumers and retailers are more frequently choosing credit cards for online and in-person payments in an effort to make transactions as contactless as possible. Moreover, the pandemic has caused a national coin shortage, causing retailers to prefer and, at times, even require the use of a card instead of cash.

If you’ve avoided using credit cards or feel worried about overusing them, now is an opportunity to rethink your spending strategy. If used smartly, they can be considered one of many effective tools to help you manage your money better.

Here are some pros and cons of using credit cards instead of cash and tips for avoiding the pitfalls from the experts at Navy Federal Credit Union.

Pros:

Boost your credit. Using your credit cards on a regular basis may be a great way to improve your credit score. Not maxing out cards and paying your bills on time shows lenders that you can borrow responsibly, which can help you get better interest rates when you need to make big purchases such as a car or home.

Earn rewards. Many credit cards offer rewards on everyday purchases like groceries, gas, and take-out. Some cards also offer a sign-up bonus, such as $150, when you spend $2,000 in the first three months, even on purchases you were already planning to make. This is an easy way to earn rewards and let your regular purchases add up in your favor. According to Justin Zeidman, head of credit card products at Navy Federal, “the best credit cards give you flexibility both in the way you earn and in the way you redeem.” Find a card that offers either extra cashback or rewards points on everyday purchases like groceries, restaurants and gas.

Track your spending. If you’re trying to stick to a budget, it’s easy to track purchases made with a credit card, especially using mobile apps that update your purchases in real time. If you’ve ever lost track of cash in your purse or wallet, not remembering what you spent it on, a credit card can help you solve this problem and better understand your spending habits, by telling you exactly where your money’s going.

Better protection. You have complete protection if your card is ever lost or stolen. Not only that, but credit cards offer protection against fraud if someone uses your number for an unauthorized purchase. Some cards also offer safeguards against buying damaged or faulty products. “If you think your card is lost or stolen, report it to your financial institution immediately,” said Zeidman. “When you’re on the phone with your issuer, explain to them the full extent of your situation. They’ll walk you through next steps such as filing a claim to dispute any unauthorized transactions.”

Cons:

Missing payments. If you’re not good at remembering deadlines, it can hurt you. Missing or late credit card payments can have a negative impact on your credit score.

The solution: “One of the easiest ways to stay on top of your credit card payment is to set up automatic payments,” says Zeidman. “Set it and forget it,” he added. If you can, pay the full amount each month, or at least more than the minimum amount, to minimize interest accumulating.

Image

Finally, during a time when health and safety are paramount, in addition to convenience and value, credit cards with contactless capabilities can offer consumers more safety and peace of mind. When used responsibly, not only can they help you to boost your credit and earn rewards, cards with contactless technology allow you to make everyday purchases without having to fumble with card systems other people have been touching. While the increase in contactless payments among American consumers has been slower compared to other parts of the world, COVID-19 has accelerated credit card usage in the U.S., and that’s a trend expected to continue after the pandemic has subsided.

COVID-19 has resulted in many changes, and as Americans reevaluate their finances in economically uncertain times, they should be sure to look in their wallets and understand how they pay for everyday purchases. As everyone’s situation is unique, make sure to carefully weigh the pros and cons of any big financial decisions. That said, there is a great opportunity for many Americans to make sure their credit cards are working for them, their rewards are maximized, and they’re staying safe.

  • Facebook
  • Twitter

Leave a Comment

Recent News

Sun Report

For Trump, city where ‘bad things happen’ looms large

October 23, 2020

Tweet Share Pin Email ABOVE PHOTO: Philadelphia resident Dexter Ayres talks with The Associated Press outside his...

Seniors

Five tips for managing high cholesterol

October 23, 2020

Tweet Share Pin Email Family Features High cholesterol is one of the major controllable risk factors for...

Week In Review

Rush, Bacon introduce legislation to honor Emmett Till and Mamie Till-Mobley

October 23, 2020

Tweet Share Pin Email WASHINGTON — On October 16, U.S. Representatives Bobby L. Rush (D-Ill.) and Don...

Health

Virus surges in key battleground states as election nears

October 23, 2020

Tweet Share Pin Email ABOVE PHOTO: Voters line up at an early voting satellite location at the...

Horoscopes

SUNscopes for the week of October 25

October 23, 2020

Tweet Share Pin Email All Signs: Halloween can be full of surprises, “Trick-or-treat!” However, this year Halloween...

Color Of Money

Budget-friendly tips for a safe and joyous holiday 2020

October 23, 2020

Tweet Share Pin Email BPT Uncertainty continues into the 2020 holiday season, with limited travel, canceled events...

The Philadelphia Sunday Sun Staff