Purpose of Credit Cards

When used responsibly, there are a number of advantages to using a credit card. While interest rates are typically high (as much as 20 percent), if you pay your balance off each month, you won’t incur an interest fee. Credit cards serve a number of purposes; how you use yours will largely depend on your needs, comfort level and ability to repay.

Instant Purchases

Since most credit cards offer a 30-day interest-free grace period, you don’t have to wait until payday to purchase an item. Credit cards allow you the freedom to get what you want as soon as you want it.


Since most credit cards typically have a limit of at least $1,000, they can be quite handy in emergency situations where you need to make a large purchase (new tires, for example) immediately.

Online Purchases

Credit cards are great for online purchases, since many online businesses won’t accept another form of payment. Keep in mind that any reputable business will offer encryption to insure that your information is protected.

Build Credit

Using credit cards is a good way to establish and build your credit. At the same time, poor repayment history or delinquent credit card accounts can lower your credit rating.

Day-to-Day Purchases

Some consumers choose to use their credit card for every purchase, since a number of credit card companies now offer rewards programs and cash back for every dollar spent.