What are the advantages of using credit cards?

There can be many advantages to using a credit card, like earning rewards, building credit and managing your finances. Many cards also offer security features and built-in fraud protection so you’re protected from unauthorized purchases. 

But the key to making the most of all a credit card has to offer is to make sure you’re using your credit card responsibly. 

What you’ll learn:

• Whether it’s a cash back card, a travel card, a points card or a secured card, there are credit card options to help you finance a variety of lifestyles and goals.

• You can get the most out of a credit card by making sure you use it responsibly by doing things like paying statements on time every month.

• Many credit cards also come with additional perks, tools and security features.

• Getting pre-approved for a credit card might help you see what cards you’re eligible for without impacting your credit scores.

If you’re using a credit card responsibly, there are plenty of benefits to having one—from earning rewards to building credit and all the extras that come along with being a cardholder. Here’s a closer look:

Earning rewards can be a great advantage of having a credit card. But with so many different types of credit cards available, finding the right rewards card for you is important. Here are a few types of cards to consider:

• Cash back credit cards: Looking for straightforward rewards? A cash back credit card might be worth considering. These cards let you earn rewards for everyday purchases like groceries, gas, dining and entertainment. For every qualifying purchase, you earn back a percentage of what you spend. 

• Travel credit cards: If you’re an avid traveler, a travel credit card might be for you. You can earn rewards miles or points on qualifying purchases, which you might be able to redeem for things like airline upgrades, vacation rentals, hotels, rental cars, cruises and more. Some travel cards may let you redeem your miles on things other than travel too. 

• Points credit cards: Points cards are another type of rewards card. The way points are earned, calculated and redeemed can vary widely from card to card. Some may work a lot like miles cards. Others may function more like cash back cards. If you think a points card is right for you, make sure you understand how the rewards work and any limitations. 

Keep in mind that each rewards card might have different approval requirements, benefits and redemption options. Some cards might have rotating rewards categories. Some might have rewards that expire before you can use them, while other cards offer more flexible ways to earn and redeem your rewards.

So before you apply, it’s a good idea to do your research and compare cards to find one that suits your spending habits and lifestyle.

A good credit score can help you get better interest rates for things like car loans, personal loans and mortgages. A good score might even help when it comes to getting certain jobs or renting an apartment.

By using a credit card responsibly, you might be able to build—or rebuild—your credit history and improve your credit scores. Responsible use includes things like paying your bills on time every month and keeping your credit utilization low.

There are plenty of cards for people who are looking to build or rebuild their credit. One type, in particular, is secured cards.

Secured cards work much like traditional credit cards. But they get their name because they require a security deposit to open the account. Think of it like a deposit that’s paid before renting an apartment. These deposits are usually refundable. But credit card issuers each have their own policies about when and how they give refunds. Secured cards are a great first step into the world of credit cards.

Having your own account isn’t the only way you might be able to build credit. Becoming an authorized user is another. An authorized user is someone who’s been given access to use another cardholder’s account.

Authorized users typically get their own card and can make their own purchases. But the primary cardholder is ultimately responsible for staying within the credit limit and making payments. 

And it’s important to keep a few things in mind:

• Responsible use by both parties can help the authorized user build or establish credit. 

• Negative actions can hurt both the account holder’s and the authorized user’s credit. 

• Not all credit card issuers report authorized users to credit bureaus. And if the information doesn’t appear in credit reports, it can’t help build credit.

Shouldn’t credit cards be able to keep up with the latest technology? Luckily, the advantages of some credit cards include a wide range of digital access:

• Manage your account on the go. Your credit card issuer might have an app—like the Capital One Mobile app—you can use to manage your account anywhere, anytime. 

• Never forget a payment. Having trouble remembering when your payment is due? Easy. All you have to do is set up automatic payments for your account to have it done for you. AutoPay gives you multiple options to decide how much you pay every month.

• Manage your finances. Digital features like Eno, your Capital One assistant, help keep an eye on your accounts 24/7 and send alerts when something’s up. Eno can also help you keep track of subscriptions, duplicate charges, refunds and more.

• Monitor your credit. Monitoring your credit is a great way to keep track of your progress and make sure your credit reports are error-free. With digital tools like CreditWise from Capital One, you can access your TransUnion® credit report and VantageScore® 3.0 credit score online without hurting your score. And it’s free for everyone, not just Capital One cardholders. You can also get free weekly online credit reports from each of the three major credit bureaus from AnnualCreditReport.com.

Unfortunately, credit card fraud can happen to anyone. But the good news is that many credit cards offer protection against unauthorized charges to help you keep your money safer.

Unauthorized charge coverage and security features vary by card issuer. Here are some features and benefits Capital One offers:

• $0 liability for unauthorized charges: If your card is lost or stolen, you won’t be responsible for unauthorized charges.

• Security alerts: Get notified via text, email and phone about any suspicious activity on your account.

• Card lock: Easily lock and unlock your card if it’s misplaced, lost or stolen. 

• Virtual card numbers: Keep your actual card number to yourself and shop online more securely with virtual card numbers.

Credit cards can be a valuable tool when it comes to managing your money and building good credit. That’s why understanding how credit cards work and using them responsibly is important. But there are a few credit habits to avoid.

Making late payments can result in late fees. And falling too far behind could result in derogatory marks on your credit reports. That kind of negative information will lower your credit scores and impact your ability to qualify for loans and credit cards in the future.

Paying your statement on time every month is only one key to building a positive credit history. If you’re able to pay more than the minimum each month, it can help you limit or avoid interest charges on new purchases. And it can help you avoid accumulating more debt than you can handle.

Another thing to keep in mind: Different transactions might have different rates or fees. For example, a cash advance might not be treated the same as a standard purchase. Knowing how APR works and how it applies to different transactions can help you avoid surprises.

If you’re still learning about the advantages of credit cards, these frequently asked questions might help.

When you understand the pros and cons of credit cards, you can plan for today, tomorrow and the unexpected. But remember that to benefit from all the advantages a credit card can offer, you’ll have to use yours responsibly.

If you’re ready to take the next step and see which credit card you qualify for, compare Capital One credit cards. Then you can check for pre-approval offers without hurting your credit.