Before you get confused, kredittkort is Norwegian for credit card. Hence, this article will discuss the reasons why your credit card should be used. We also reveal when plastic cards should be used and when it is irresponsible to use.
When to Use your Credit Card
We are pretty sure if you have a financial adviser they would have told you to stop using your credit card. And the reason is not far-fetched: Most people are irresponsible when it comes to making use of their plastic which is why a lot of folks are in debt.
Despite this general issue, using your kredittkort has more advantages than using your debetkort (debit card in Norwegian) and cash in a lot of instances. Click here to see which is better for making payments: Credit card or debit card.
Therefore, in this section, we will discuss reasons your plastic should be used. We also reveal certain strategies that will help you financially.
1. Reward Points
Kredittkorts have a setup option that allows you to earn points for each dollar spent. Some kort (card) reward you with additional points for particular spending categories such as groceries, restaurants, or gasoline.
Furthermore, when you reach some earnings thresholds, you can redeem the points for travel, merchandise products using the online rewards gateway of the Kredittkort Company, or gift cards that can be obtained from restaurants or retailers.
2. One-Time Bonus
Most credit cards come with an early one-time bonus opportunity. Sometimes, if you have a good financial standing history, you could end up with cards that have a bonus of $150 and above provided you spend about $500 upward within a couple of months after opening the account.
Some cards offer bonus reward miles or points that you can redeem for gift cards, travel, statement credits, merchandise, or checks. This is one difference between credit and debetkort as the latter doesn’t have such bonuses or future rewards.
3. Frequent-Flyer Miles
Starting from the 1980s, this benefit has been in existence for quite some time; even before most of the others discussed in this post. At that time, American Airlines were giving an innovative way whereby frequent-flier miles could be earned by customers even while not in the air. The airlines did this by partnering with Citibank which was a major issuer.
Nowadays, this tradition continues with airlines offering a minimum of one card while partnering with some top kredittkort companies. As a cardholder, you earn one dollar per one mile from net purchases. On the other hand, cards that are lower-end without an annual fee can deliver two dollars for one mile.
The value of your reward is dependent on the kind of ticket you bought with the miles or points. Most flyer plastic has more value as a result of mileage-based bonuses. Once you meet the original spending requirement, you can get a 50% to 100% award flight.
Between credit card refinancing vs debt consolidation, there is no distinction. Both are terms that refer to the act of taking out a personal loan to pay off your credit card debt.
4. Cash Back
The cashback idea is very simple: Purchase with your card and get back 1% of your purchase in cash form. That was the premise then when the idea was introduced. But nowadays, you get much more than 1% with some even offering up to 6% on specific purchases. But high percentage cash backs like that usually have spending caps on a quarter or annual basis.
When looking for the best kredittkort for cash back, go with those that charge less fees and interest, but offer more rewards rate.
There is an endless possibility of the rewards available to you. Hence, by leveraging on your daily expenditure, you can get amazing daily rewards. The challenge is to discover what type of kort is perfect for your pattern of spending. Do not alter your pattern on spending to fit a card as it might be counterproductive.
So, if there is a retailer or a hotel you are constantly patronizing, set up a card that can help you further in improving your patronage by providing improved rewards, benefits, and discounts.
5. Keep Vendors Truthful
If you hire any professional or technician and pay them with a check, you cannot withdraw funds from them if you discover they aren’t truthful or didn’t do the job well.
However, if you pay with a kredittkort, your issuer can prevent the vendor from having access to the funds when you make a complaint. This is because the issuer will not want to encourage any form of fraud. And you can recover your money in the process.
6. Grace Period
Unlike when you pay using a debit plate, the money is instantly withdrawn, but with a kredittkort, the money is still there until you make payment of your card bill.
This grace period helps in the following ways:
i. You save money because of the value of time value that causes cheaper payment when delayed. Also, using a kredittkort allows your money to remain in your bank account a little longer which might earn you money as interest if such an account is set up to do so.
ii. You don’t have to monitor your account balance.
7. Safety
Using a credit card protects you from fraud losses. When a thief uses your debit card, the money cannot be traced because it is withdrawn instantly. However, with a kredittkort, you can report to your issuer not to make payment for such transactions.
Also, when a payment bounces via debit card payment, your credit score can be affected. This doesn’t change even after such transactions have been cleared.
8. Building Credit
Anyone who wants to build credit for the future should start making payments with a kredittkort. This is because your issuer will report such activities to credit bureaus. This is then used to enhance the credit score.
However, if you use a debit card, it doesn’t reflect on your financial status report. Therefore, it cannot help in building or improving your credit.
The use of a credit card to deposit funds that will be used in acquiring a secured kredittkort can also help in building financial standing that can be used to get larger loans or unsecured cards.
9. Insurance
The number of automatic insurance on credit cards is one of the reasons why you ought to use your kredittkort. Some of these insurance include car rental, product warranties, and travel insurance.
10. Universally Accepted
Not every purchase can be made with a debit card. The reverse is the case when it comes to credit cards. For example, hotel booking or car rentals are much easier with a kredittkort rather than a debetkort. This is because the hotel and rental companies want to be able to charge for damages if any.
Furthermore, the hotel or company will have no idea how much your final transaction will cost unless you made prepayments. Hence, with a kredittkort, your credit line can be blocked to ensure they get their full payment.
Lastly, not all countries accept debetkort irrespective of the issuer. On the other hand, credit cards are universally accepted. Visit https://www.kredittkortinfo.no/ to learn more about credit card types.
When a Credit Card shouldn’t be used
As much as paying with a credit card has its perks, there are certain instances where it isn’t a good idea.
You can get huge discounts from the purchase of large items from retailers. This could profit you, but you won’t enjoy any of the protections you would have gotten.
The main reason why a kredittkort shouldn’t be used is because of an individual’s spending habits. Therefore, do not use plastic if…
i. You will not be able to pay the balance of your financial standing back on time and in full.
If you are laws guilty of this, debit cards or cash are more suitable for you. This will protect you from interest charges and damaging your credit score.
ii. Your expenses are more than your income.
If this is the case, using a debit card will save you from entering into debt as you are only able to spend what you have earned.
iii. You always exceed your given credit limit.
What this does is that it brings about increased fees and damaged credit score.
Conclusion
If you are responsible and disciplined, you will enjoy financial profit from using your credit card. If you are such a person, make most of your payments on your kredittkort and use debit cards for only ATM.
