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Do you have apprehensions about getting your credit card? The chances are good that you’ve heard tales of pals who got carried away and ended up with a mountain of debt. Alternatively, you may be apprehensive about apply for credit card when still repaying student loans.
It’s not necessary to be afraid of paying with plastic. In reality, building a solid financial foundation requires smart use of borrowing. A credit card account is more than simply a simple payment method; it also provides essential built-in perks and security for your money. Here are some of the most important aspects.
Obtain a credit rating
Using your credit card responsibly is one of the most effective ways to raise your credit score quickly. Paying your payments on time and not carrying a load on your credit card can help you keep your credit card balance under 30% of your available credit (the debt utilisation ratio). When you borrow responsibly and pay your bills on time, you will have a positive credit history.
Protection against online fraud and theft
Federal law is on your side when you use a credit card to make an online purchase. The Fair Credit Billing Act allows you to temporarily postpone payment while the creditor examines any charges you think are incorrect. You’re also only responsible for fraudulent charges on your credit card. On the other hand, many apply for credit card providers instantly reduce the customer’s responsibility to zero.
The following additional benefits are offered on select cards: extended warranty, replacement coverage, longer return period, and assured price protection. Consider the scenario in which you have done your homework and located the best bargain on a brand new laptop, only to see its cost drop by half a month later. If you purchased the item using a credit card that has a price protection feature, you may be able to seek a refund for the difference in price. Check the limits on your card to determine if there are any exclusions, claim limitations, or deadlines that apply.
Dispute resolution and buyer protection
If you make a good faith attempt to settle the disagreement with the seller, if the charge exceeds, or if the transaction was done in your home state or within 100 miles of your current billing address, this additional layer of protection kicks in.
Credit card issuers often include a waiver of the charge amount and the geographic restriction.
Within two billing cycles or 90 days after your written notification to your card issuer, whichever comes first, the dispute must be settled.
Bonuses and rebates
There are a variety of reward card schemes to choose from. It’s very uncommon for retailers to provide points that may be redeemed in gift cards or hotel points in exchange for your purchases. On the other hand, cash-back reward cards are a little less complicated. Instead of giving you cash, they offer you credit or a refund for future purchases that you may use any way you see fit.
Financial assistance in times of crisis
In the case of a high-cost emergency, having to apply for a credit card line of credit accessible to you may also provide a degree of financial protection. It might be anything from a broken automobile to a sudden need for medical attention. The knowledge that you have a backup line of credit, even if it’s just a temporary one, will provide you with a sense of security until you can transfer funds from your savings, if necessary.
Conclusion
And keep in mind that, three elements should be considered when selecting a credit card: a low annual percentage rate, a solid rewards programme, and the absence of an annual fee.
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