Credit cards are used in the US for a number of reasons. They are safer since, despite the convenience, you almost never pay for theft or fraud. They frequently provide prizes. They aid in improving your credit standing. Your account balance is not a concern at the moment of purchase. They also provide free insurance on rental automobiles, among other benefits. Banks are pushing them hard because they can profit from them. If a merchant is acting inappropriately, it is simple to stop or reverse a credit card payment to them. Debit cards, on the other hand, lack all of these advantages. Banks have little motivation to encourage you to use debit cards more often because they don’t get much revenue from them until you overdraw or something similar. As a result, they don’t provide incentives or other advantages.
Some claim that one drawback of having a credit card is the possibility to spend more money than you have. But there is actually a benefit. Although doing it when it is not necessary is undesirable conduct, the users, not the card, are to blame. Obtaining a credit card with a very low limit is an option if this is a concern for you.
American credit card usage: Why?
Even though 86% of Americans still utilise cards for at least part of their purchases, cash is still king. Americans frequently utilise credit cards for both big and little purchases. Convenience, credit card benefits, as well as the ability to finance purchases over time and establish a credit history, are some of the justifications for this.
Convenience
Credit cards are practical since they are rapid, secure, and often don’t need immediate repayment. Most credit cards do not charge interest on new purchases as long as your monthly statement is paid in full prior to the due date. This is especially useful if, for instance, you have an immediate need for purchase but won’t be paid until the next week.
Debit cards are also utilised for convenience and are a common form of payment in the United States, just like credit cards. If you can’t acquire a credit card or aren’t ready for one, debit cards might be a decent substitute. However, if you simply use a debit card, you won’t have access to some of the security features and reward opportunities that credit cards may offer. Your credit history won’t be affected by debit cards either.
Increasing credit scores and credit history
A significant aspect of American financial culture is credit ratings
Due to the fact that you might really have many credit scores, the phrase “credit score” can be a little deceptive. The many pieces of information gathered and reported by the country’s consumer credit bureaus are used to calculate these scores. Even without a social security number, you can still have credit ratings! In the US, your credit ratings are significant. Without credit ratings, it could be challenging for you to get authorised for credit card accounts, be eligible for mobile phone plans, or even be able to rent an apartment.
Over Time Financing a Purchase
Credit cards are revolving loans, so you have an available credit line that you may use and repay over time. In return for the ease of making smaller payments over time, the card issuer will impose interest if you don’t pay your whole statement balance by the due date.
Many people who use credit cards believe that the minimum payment required each month is all that is required. However, doing so will only assist you to avoid incurring late penalties and interest on the outstanding debt.
Getting Used to American Credit Culture
Remember that your credit history will be completely blank when you are studying in the United States. Try to establish sound credit habits in advance if utilising credit is crucial to you or if you want to stay in the United States for an extended period of time.