Is a credit card right for you? Here are some of the benefits!

A credit card is a significant financial commitment. It enables you to borrow a set ongoing amount of money from your bank or lender, and pay it back within the month, before accruing interest. While credit cards are a serious commitment, they also come with a range of benefits, which draws in a lot of customers!

There are different types of credit cards on the market, and each of them are designed to offer slightly different benefits. Here are some of the benefits you can enjoy with credit cards. 

Credit Cards Build Credit History

Your credit score is a reflection of your credit history, or your ability to pay bills on time, such as your rent. A credit card can build your credit score positively if you pay off the balance of your credit card in full each month, or before the interest accrues. This can work in your favour if you decide to apply for a personal loan or home loan. The rule of thumb with a credit card is to always pay off the balance in full each month so you can reap the rewards of a positive credit score. 

Airline Rewards Credit Cards

Some credit cards come with airline rewards. As you spend on the card, you can earn points towards an airline’s loyalty program. Several credit cards in New Zealand are linked to Air New Zealand and its Airpoints program. So each time you spend over a certain threshold, you’ll receive Airpoints. As these points add up over time, you can reward yourself by using the Airpoints to cover a portion of a flight, or shop at the Airpoints store. It’s important to make sure you can pay off the balance in full each month to make sure you don’t earn interest, which would then negate the benefits of the earned Airpoints. 

Cashback Credit Cards

Cashback credit cards are another great way to benefit from the commitment of a credit card. They work by giving you money when you make purchases on the card. For example, you may choose a card with a 1% cash back option. This means that if you spend $10,000 in a year on that card, you would get $100 back. But again, be sure to pay off the balance of the card in full each month to avoid the interest negating the reward. 

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