There is a common misconception that somehow having credit is a bad thing, and something which should be avoided. In truth this simply is not the case and it is in fact poorly managed credit that must be avoided, or taking out credit with extremely unfavorable terms. In contrast, having a well-managed credit profile, especially that of a credit card, can offer you a huge amount of benefits and advantages.

    If you have been avoiding getting a credit card because of the myth that debt is bad, here are just a few reasons why a correctly maintained credit card can greatly improve your life and your finances.

    Raising Your Profile

    When you first start working, it can be difficult to get started with taking out credit, this is because your lack of financial history, what will usually happen is you get a small amount of credit, to see how you manage. Credit profiles are built on the bank or lender’s confidence in you as a borrower, and whether or not there is a risk of non-repayment. In this regard then, having a credit card that is used regularly, and well managed and kept up to date, can greatly increase your chance of being able to lend more in the future. For example, this could greatly help you when the time comes to take out a mortgage.

    Benefits

    Credit cards are more than just about borrowing money, they can also be used for a huge amount of bonuses. You can collect points on what you spend on your credit card, and use them for an array of things such as air miles, discounts or even using the points as payment on their own. Because of the competition amongst banks and lenders, they use benefits like this to win customers, and each country offers something different, for example some American Express cards were listed as top options for rewards credit cards in Canada. Even within banks you can tailor your points for different things, depending on what suits you.

    Interest Free

    Using a credit card will often give you an interest free payment scenario which can make paying for big items much easier. To begin with you will usually have a grace period of around 20 or 30 days from when you take the card out, to make interest free purchases which will be settled the following month. Occasionally what many credit card services do, is to have randomly selected months where they will offer you 12 months without interest, perfect for a big purchase. Also keep your eyes out for when credit card companies team up with other businesses or products to offer you interest free purchases or discounts. This can apply to anything from concert tickets to hardware supplies, and you credit card issuer will send you communications to keep you up to date on where the best offers are.

    There is nothing wrong with well managed credit, it is in fact recommended for the reasons listed above.