Getting a credit card

What Are the Advantages of a Credit Card? contents
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What Are the Advantages of a Credit Card?

6 min read
Last Updated: August 22, 2024
Getting a credit card

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Key Takeaways

  1. Credit cards offer fraud protection.

  2. Some credit cards allow you to earn cash back rewards on purchases.

  3. Responsible credit card use can help you build your credit history.

A credit card is an account that lets you borrow money to pay for everyday purchases such as gas and groceries. It can also be a great resource for purchasing big-ticket items such as TVs, travel packages, and jewelry because the funds for these items aren’t always immediately at your disposal.

The advantages of credit card spending may include earning rewards, traveling, handling emergencies or unplanned expenses, and building credit.

Credit card benefits

  • Rewards such as cash back, miles, or points
  • Protection against fraud
  • Increased purchasing power
  • Not linked to a checking or savings account
  • Rental car or hotel room holds
  • Credit history building and rebuilding

Understanding credit card terms

When making a purchase with a credit card, it’s important to remember that the credit card company is giving you a loan that you need to pay back. This loan has an annual percentage rate (APR). An APR is the rate applied to your balance that’s subject to interest (according to the terms agreement with your credit card issuer).

What are the benefits of using a credit card?

Credit card advantages range from rewards to fraud protection. Check the terms of each card you’re considering for the benefits that that come with the card.

A rewards credit card does exactly what its name implies: rewards the cardholder for making purchases. Rewards can vary by issuer and card type. Some reward programs come in the form of cash back, discounts on gas station purchases, and even travel miles.

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Credit cards can also be beneficial when traveling. This is because some major car rental companies and hotels require a hold on a credit or debit card to reserve a vehicle or book a room. The hold on your card can last several days or longer. The amount of the hold on either a credit or debit card is not available to use during this time (and can be more than your final bill). Credit cards may offer greater flexibility if you don’t have enough funds in your bank account to cover the hold and all other charges you’ll incur while traveling.

Did you know?

Some credit cards offer fraud alerts if someone steals your card or information. If there’s possible fraud, you’ll get an alert (by phone, email, or text) and you can tell your card issuer to stop the transaction. With Discover® Card’s $0 Fraud Liability Guarantee, you’re never held responsible for unauthorized purchases on your Discover Card.1

How do I use credit cards responsibly?

Two ways to use your credit card responsibly is when you pay your credit card bill by the due date and keep your balances low.

Discover Card advantages

Discover credit cards offer advantages worth considering. Each card has its own terms, and you’ll want to study them carefully. But here are a few of the benefits if you become a cardmember:

Discover® Cardmembers can earn cash back from purchases made using their Discover credit card. Different cards offer different rewards programs, such as cash back or Miles, so you’ll want to choose the one that rewards your spending habits. Discover has unlimited Cashback Match: we'll automatically match all the cash back you’ve earned at the end of your first year.2

When you’re a Discover Cardmember, you can get your FICO® Credit Score and important information behind it, like credit utilization, number of missed payments, number of recent inquiries, length of credit history and total number of accounts for free.3 That means you can easily keep track of your progress toward building good credit.

All Discover® Cardmembers have protection with a $0 Fraud Liability Guarantee. This means you’re never held responsible for unauthorized purchases on your Discover Card.1

Check out quickly when you tap and pay with your contactless card. Or add your card to your digital wallet for a fast and easy checkout.

Discover is accepted nationwide by 99% of the places that take credit cards.4

What to look for in a credit card

To choose the best credit card for you, consider these features:

Credit cards may come with fees, such as annual fees (Discover has no annual fee on any of our cards), foreign transaction fees (Discover has no foreign transaction fee), balance transfer fees, and late payment fees. 

 

If you use your card responsibly, you can avoid some of the fees—like late-payment fees. Others, like annual fees, might be unavoidable, and you could be on the hook for them year after year.

Credit card rewards run the gamut, from cash back and travel miles to hotel points and retail perks. Every rewards credit card has a unique offering and set of terms around how you can earn rewards and redeemed them. The trick is to find a card with rewards that favor your spending profile. For example, a travel miles card that rewards spending on airfare may not be a good fit if you only fly once a year. But a gas rewards card might be just the match for your hour-long commute to work.

Promotions are common ways for credit card issuers to appeal to applicants. Common promotions include welcome bonuses that offer enhanced rewards for a limited time, introductory APRs, or 0% APR on balance transfers. These offers can be a great way to get extra rewards out of your new credit card or temporarily lower your interest rates. But make sure you understand your card issuer’s promotions fully before taking advantage. Many promotions have a time-limit (like introductory APRs) or come with spending thresholds (like sign-up points or miles where you need spend a certain amount of money to earn).

Credit cards can have multiple APRs such as an introductory APR, balance transfer APR, standard purchase APR, cash advance APR, and penalty APR. You’ll want to understand all of them and compare across cards while you’re weighing your options. Of course, if you pay your balance on time and in full every month, you won’t have to worry about paying interest.

Is the card accepted where you shop? Some credit card networks are wider than others. It’s a good idea to research the footprint of the card issuers you’re considering.

What security features does the card offer? Will the issuer text you if your Social Security number is used to run a credit check? Can you disable your card easily if you lose it or it’s stolen? Having features like these can give you critical peace of mind if something goes wrong or you’re a victim of credit card fraud.

Armed with the knowledge of how credit cards work, the benefits they can provide, and how to use them responsibly, it might be time to take the next step and find that perfect card.

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