So When is Credit Card Debt Good?
Is credit card debt ever good to have? There are a few situations when it is quite alright. The spirit of a credit card is to allow you to get a loan quickly when you need it. But keep in mind that you pay quite a bit for this convenience and so it is ever so important that any credit card debt you incur be managed very wisely. Let’s look at some instances when credit card debt is really alright to have:
Credit card debt is good in that it can build your credit. When you carry a small amount of credit card debt and pay it each month it actually reflects favorably on your credit rating because it shows you manage debt well. This is only for small debt however. When you have high balances and many credit cards it works against you because your credit profile shows a house of cards ready to crumble.
It can be good to incur some credit card debt if you are buying products or services on the internet. When you use a credit card on the internet, you are actually safer than if you used a debit card. This is because if you become the victim of internet fraud (someone steals your credit card number) then you are only liable for $50 with the credit card company. Credit cards companies also have sophisticated methods for detecting when someone might be fraudulently using your card so you get to take advantage of those services too.
Sometimes the goods you buy with certain credit cards are protected by insurance. Some of the credit card companies offer buyer protection insurance coverage for goods purchased with their card. This is where it would be beneficial to incur the credit card debt and then pay it off just so you get the loss coverage. If the credit card used to purchase the product has this insurance, you can file a claim if it gets stolen or otherwise damaged through no fault of your own.
No one can deny that a credit card is not good for emergencies. Incurring credit card debt is perfectly valid when you have an emergency. In fact, it is for this reason that a good percentage of the public has high credit card debt. When you have a medical emergency and have to pay the health insurance deductible at the emergency room, a credit card is great for taking care of that quickly. If there is a death in the family and you have to quickly get a plane flight, incurring the credit card debt to get the ticket can get you home to your loved ones.
A credit card can make a way for you to buy goods at the time they are discounted. You might be shopping for some high-value item and find it on sale at a special price. As long as it is a true bargain, you can incur credit card debt to get it at that moment. But you need to make sure that you clear the credit card debt quickly after that or else there was really no discount at all.
A major credit card is usually required for automobile rental. This has been the automobile rental industry’s policy for many years. They usually pre-authorize the charge on your card at the time of rental in order to protect themselves.