As long as you manage your credit spending and payments responsibly, there are endless advantages to using a credit card. They offer rewards, protection, and convenience.

Why use credit cards? Other payment options, like debit cards and cash, may seem like an easier way to stay within budget. Credit cards have a reputation for encouraging holders to spend money they don’t have — especially when enticing offers come in the mail.

But here at Money Under 30, we think a good credit card is a must-have. When used responsibly, credit cards can be great for your financial well-being. In fact, smart credit card holders can earn money just by using their card.

So, what are the benefits of a credit card, and how can using one help you come out ahead? Here are 12 ways.

1. They Build Credit History

Perhaps the most important reason to have a credit card is to build up your credit history.

Credit scores, taken from records of your financial activity, are essential if you plan to borrow money. These scores come partially from your credit card history.

Unlike debit card use, credit card use is reported to the bureaus that monitor scores. A track record of paying a credit card balance on time helps your score immensely. And the longer you use credit cards, the more you’ll build your credit history, improving your score even more.

Read more: How Credit Works: Understand The Credit History Reporting System

2. They May Offer Sign-On Bonuses

As a welcome gift, many cards offer bonuses for signing up. Usually you have to spend a certain amount (sometimes within a certain time period) to get the bonus, so read the fine print. But it’s still an invaluable perk.

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Right now, the Chase Sapphire Preferred® Card has a promotion offering 60,000 bonus points after spending $4,000 in the first three months from account opening. 

Read more: Best Credit Card Sign-Up Offers

3. They Give Cash Back

When you make purchases on cash back credit cards, you earn a small amount of money back. The cash reward can be anywhere from 1% to 6% of your purchase total. That may not sound like much, but over time these rewards can add up to a sizable bonus.

Read more: Best Cash Back Credit Cards

4. They Offer Rewards Programs

There are almost as many rewards programs as there are cards. The trick is to find a rewards program that fits with spending habits you already have, or that partners with a retailer you already like.

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Rewards programs can include, but aren’t limited to:

  • Points systems cards. You earn points based on how much you spend, and you cash in points for gift cards or other rewards.
  • Frequent flyer cards. You rack up airline miles every time you fly, which you can redeem for discounts on future flights. These cards may offer lucrative sign-up mileage bonuses.
  • Travel rewards cards. These offer “credit card miles” — slightly different from frequent flyer miles, but still giving rewards for travel.
  • Everyday spending rewards cards. These cards earn you rewards in common spending categories like restaurant dining, gas, or groceries. This type of card can be great for users who don’t do much traveling but still want to get the most out of their card.

The Citi Premier® Card is one of our favorites for reward-style perks.

Read more: Best Rewards Credit Cards

5. They Track Your Spending for You

Want to budget better? Credit card statements are a built-in expense tracker. Your purchases get recorded online with all the essential information — where, when, how much, and how often you’re spending. Some card companies keep your spending records around for years.

This benefit becomes especially useful come tax time. With one record of the past year’s spending already compiled, you’ll save time and effort on your taxes. Business expenses, rental property expenses, charity contributions, and more tricky tax return areas all show up on a credit card statement.

Read more: Credit Cards Can Be Your Most Powerful Budgeting Tool — Here’s Why

6. They Protect Against Fraud

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One of credit cards’ biggest advantages over debit cards is the level of fraud protection they offer. For example, the Chase Freedom Flex℠ safeguards your account using real-time monitoring for possible signs of fraudulent activity.

Say your credit card is stolen or someone finds your card information online. Even if the thief starts making purchases on your card right away, you won’t lose much money since charges to credit cards aren’t withdrawn immediately.

Once you notify the card company of the theft, they’ll put a hold on your card and investigate. You aren’t liable for any fraudulent purchases made in the meantime. Federal law protections for credit card holders keep you from losing much cash. The most you’ll potentially be liable for is $50. And if you report before a purchase is made, or if your credit card company has a zero-liability fraud policy, you won’t lose anything.

Now say your debit card is stolen. Since debit card funds are deducted instantly, any money spent on fraudulent purchases will be gone. Automatic payments you’ve scheduled might be canceled as a result. If you report the theft within 60 days, the transactions can be reversed and the money restored. But this takes time and can be much more disruptive than a credit card theft.

Read more: The 5 Biggest Debit Card Dangers

7. They Let You Transfer Your Balance

In a balance transfer, you move your debt from one credit card to another. Other debts, like car loans and monthly installment payments, can be moved to a balance transfer credit card.

You’ll still have to pay what you owe, of course. But if you switch the debt to a card with a lower interest rate, you save money over time. Balance transfers can also consolidate debt and make your life easier.

Read more: Best Balance Transfer Credit Cards

8. They May Come with Purchase Protection

Consumer protection is a huge perk of many credit cards. If you buy an item with a credit card and later find out it’s damaged or the quality is poor, you can return the item and get the charge removed.

Credit cards may also offer extended warranties on electronics, furniture, and other items you hope to use for a long time. In many cases the card doubles the time on the manufacturer’s warranty. Make sure to keep your receipts!

9. They Have Built-In Grace Periods

Essentially, credit cards offer a zero-interest loan for 30 days or less. Unlike debit cards, credit cards don’t require you to have the funds for a purchase immediately. There’s a grace period for you to make payment arrangements.

Use this grace period wisely, since credit cards work best for you if you pay off the full amount each month.

Read more: How Grace Periods Work — and How They Can Work for You

10. They Tack on Insurance

Check out the consumer protections offered with your credit card. Chances are you’ll find benefits you didn’t know you had.

In addition to extended warranties and purchase protection, many cards offer return protection, rental car insurance, and travel insurance.

Read more: Is It Worth It To Get a Credit Card Just for the Insurance Benefits?

11. They’re Universally Accepted

Speaking of travel, your credit card is your best friend when you’re traveling. Housing and rental cars are much easier to book with credit than debit. Rental services generally place a hold of a few hundred dollars on your card. This hold can be inconvenient with a debit card.

Credit cards are also more readily accepted than debit cards worldwide. If you’re traveling to a foreign country, plan to use the lower exchange rates on your credit card instead of paying high exchange rates for cash at airports.

Read more: Best Credit Cards for International Travel

12. They Have Fewer Fees

Credit cards don’t come with the overdraft charges or individual transaction fees of debit cards. While credit cards may have annual fees, the rewards and cash back you earn might cancel them out. Chase Freedom Flex℠ is a clear winner here, as there’s no annual fee.

Read more: Is an Annual Fee Credit Card Ever Worth It?

Summary

If you can use a credit card responsibly, there’s really no reason not to. The benefits of a credit card include rewards, protection, and convenience, as well as regular reporting to the credit bureaus, making it easy for you to build your credit.

Intelligent credit card use can save you plenty of cash and keep your money protected, with some perks thrown in as well. Not a bad rate of return on a single spending method!

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About the author

Amy Bergen Writer
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Amy Bergen is a writer and editor based in Portland, Maine. She's interested in technology, literature, and how the world will change in the future. You can reach Amy on LinkedIn, Twitter, or Facebook.