TEMPLE, Texas — Last week on Money Talks, 6 News gave you part one of our delve into credit cards, so naturally, this week we go to part two!
In this edition, we are strongly focusing on some of the advantages and protections that credit cards offer.
In a quick review of what we covered in part one, credit cards will greatly affect your credit score. Keep small balances and pay on time. Studies show that we spend more when swiping the card than when paying cash.
Certified financial planner Neil Vannoy reminds us of places to go to look for credit card deals.
"Sites like nerdwallet.com, wallethub.com, and thepointsguy.com can help you find the best credit card for your specific needs," Vannoy told 6 News.
You have to decide what card or type of reward is best for you!
"There are two general types of credit card rewards," Vannoy said. "Cards that reward you with cashback and cards that let you earn points or miles. Cards that give you cash back on your purchases are the simplest since they don't require you to redeem miles or points. You simply redeem the rewards for cash."
But if you're someone who travels a lot or spends a lot on vacations, the second option might be better for you, Vannoy said.
"Cards that earn miles and points can be great, especially if you're willing to do some research to find out the most effective way to redeem your points," Vannoy explained. "If you travel a lot and stick with specific hotels or airlines, using a credit card affiliated with those brands can help you earn a higher loyalty status and give you things like free stays at hotels or free checked bags when you fly."
Vannoy also said that for consumer protection, credit cards are better than debit cards.
"Personally, I don't like to use a debit card because when you hand over your debit card the money is immediately pulled from your bank account," Vannoy said. "So if there's fraud then you've got to fight with your bank to get your money back, and that can take some time. If you use a credit card and there are unauthorized purchases or if there's a problem with a transaction or the merchant, you've got that statement period where you can call the credit card company and have them start a dispute before they pull it out of your bank account so that gives you an added layer of protection."
But also watch out for fees, especially if you are traveling internationally.
"If you are traveling internationally make sure that your credit card doesn't charge an exchange fee for the exchange into other currencies," Vannoy said. "Those can be rather large and really, these days, there's no reason not to have a card that gives you free currency exchanging when you are traveling abroad."
A credit score above 670 is considered good and a score above 740 is considered excellent. The better your score, the better deals you will get when borrowing money.
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