It’s true that credit card misuse can result in serious consequences, but as long as you are careful with how you use it, having a credit card can also provide you with many important benefits.

Trends indicate that Canadians are using fewer credit cards than they used to. At the same time, however, they have higher limits and are borrowing more on the cards that they have. This has led to an increase in credit card debt and an increase in delinquency rates. It’s important to be aware of these statistics and, rather than allowing them to scare you away from credit card use, to use them as a reminder to develop smart and careful spending habits. When used responsibly, credit cards offer many advantages, including:

Helping you build a good credit history

Without regularly using a credit card, it can be difficult to build a good credit history. Having a credit history is important when you want to get a loan for a house or a car, or even if you just want to rent an apartment. A good credit history lets potential lenders and landlords know that you can be trusted to responsibly pay back your debts or make regular payments for rent.

Better security than debit cards

Credit card fraud does exist, but it isn’t as potentially damaging as someone having access to your bank account through your debit card. A debit card provides direct access to your funds, instantly removing the money from your account. Credit cards not only have a limit but credit card fraud also won’t immediately put you out of your actual money. Credit cards tend to have better and more responsive fraud protection than debit cards as well. Credit card companies are always on the lookout for suspicious spending and will alert you if you may have fallen victim to fraud.

Helping you keep track of purchases

While a credit card is used for spending, it can also be a useful budgeting tool. Going over your statement every month can help you better understand your spending habits, create a budget, and stick to your budget.

Cash back and rewards

Many credit cards offer cash back and various rewards simply for using them. For example, you may receive a certain percentage back on payments for certain purchases or even for all of your purchases. Cards that offer points instead then allow you to use your points to buy rewards such as gift cards, home décor, kitchen supplies, or a variety of other everyday items.

Help with emergency payments

A credit card essentially allows you to defer payment, making them useful in a pinch if you need to make an emergency payment which you don’t have the funds for. While it is always ideal to have extra savings set aside, sometimes it simply isn’t the reality. If you do use your credit card for an emergency payment, make sure you create a plan and a budget that will help you pay off your debt afterwards.

There is always some level of risk involved in borrowing money. However, the benefits of using a credit card responsibly far outweigh any potential risk. In today’s world, where having a good credit history and the ability to make secure payments are of utmost importance, it often pays to pay with a credit card.