You may have heard that applying for a credit card is bad. That’s only partially true. If you’re smart about using your credit card, it can be a great tool to help build your credit score and make it easier to get things like a mortgage or car loan in the future. Here are four reasons why you should apply for one (or more!) of these cards today:
Rewards are the main reason to apply for a credit card. Depending on your preference, you can use rewards to get cash back, discounts or travel points. You typically earn rewards at a rate of 1% or more when you spend money with your card.
SoFi professionals share, “Make 12 monthly on-time payments of at least the minimum payment due, and we’ll lower your APR by 1%.†︎ It’s that easy.” This will help with earning more rewards.
Apply for a credit card, and you’ll build your credit history, increase your credit score and get a higher credit limit. You can also get better interest rates on many loans, including mortgages and auto loans.
Credit card companies use the information they have about you—like how often you pay on time and how much money is owed—to calculate an overall picture of how responsible of a borrower you are. This helps them determine whether or not they should offer to finance someone with little or no financial history (like college students).
Using your card responsibly over time can build up this picture of responsibility. It will help you in more significant purchases like houses or cars, and lenders will be more willing to work with you on terms.
Credit card companies are protected against fraudulent transactions. If you have a credit card, it’s no longer on you to pay the bill if someone steals your identity or credit card information. Instead of getting stuck with a $5,000 bill because someone stole your information, the bank will reimburse you for all costs associated with this fraud activity.
Most cards offer zero-liability protection, which means that if there is ever an unauthorized charge on your account, they will cover 100% of any loss incurred due to fraudulent activity. They’ll also provide reimbursement for any additional expenses caused by their negligence (i.e., overdraft fees). In addition, they also offer free identity theft resolution services so that you can begin repairing the damage done by identity thieves as soon as possible!
A credit card can be a lifesaver if you ever find yourself in a situation where money is needed in an emergency. For example, you can use your credit card to get cash at an ATM or make purchases. You might even be able to transfer money from your checking account to another account using your credit card.
This lets you keep some cash on hand without worrying about spending too much on groceries and other items that will not benefit from being paid off immediately.
Remember, other options are available if you don’t have a credit card and want to build some credit history. So, open a secured credit card and deposit money into an account that will be used as collateral for the card.
This can be helpful because most secured cards come with low-interest rates and no annual fees. However, they don’t offer rewards as traditional credit cards do. If you already have good or excellent credit or need emergency funding, applying for a new line of credit may be your best bet!