Did you know that 3 in 10 Americans believe credit cards do more harm than good? Over the years, many people have been warned of the negative effects of credit cards, but when used right, they can have numerous benefits.

While you might have refrained from getting one, understanding how to effectively use credit cards to your advantage can ultimately help you maximize your credit score, receive rewards and enjoy added security and protection.

Build your credit score

Shockingly, 35% of FICO credit scores are based on payment history. This is where your credit card can come in handy. By making sure you pay off your bill before the payment is due, the credit bureaus will receive a positive report. An added plus is there won’t be any interest accrued.

Additionally, raising your credit amount will allow you to decrease your utilization ratio. For example, instead of the credit bureaus seeing that you are using 100% of your $10,000 limit, if you increase your limit to $20,000, they will see that you are using 50%. A good rule of thumb is to keep your credit utilization under 30%.

Rewards

Wouldn’t it be nice to be rewarded when spending your hard-earned money? Credit cards do just that. Some common rewards you may be offered include the following:

• Cashback programs.
• Travel discounts and insurance.
• Gift cards.
• Statement credit.

The rewards that are offered depend solely on what lender you go through and its requirements for annual fees and spending. Rewards can vary drastically and sometimes aren’t worth the extra money you would need to spend to achieve them. Here are some viable options to consider if you are in the market:

• Capital One Quicksilver cash rewards credit card.
• Bank of America Unlimited cash rewards credit card.
• Chase Freedom Unlimited.
• Discover it Cash Back.
• Capital One Venture Rewards credit card.

When shopping for a credit card, weigh the pros and cons of benefits, interest rates and annual fees. Keep in mind that some credit card companies require you to spend a certain amount of money to receive benefits.

Security

It’s estimated that 2 in 3 cardholders will experience fraud. Luckily for credit card holders, there was a bill passed called Fair Credit Billing Act. This law allows holders to dispute a charge up to 60 days after it was made. Best of all, if it is determined it was made by an unauthorized user, liability can be no higher than $50.

Some credit companies have added on to this benefit, offering zero fraud liability. The cardholder will report the fraudulent transaction like normal but will be refunded for the whole amount if it is found to be an unauthorized charge.

Protection

It happens to all of us: sometimes you’ll buy an item and it arrives damaged or doesn’t work as advertised. Unfortunately, you are often at the mercy of the company that sold an item to you when you try to return it. However, that’s not the case with certain credit cards. Depending on the credit card you choose to use, there is additional protection for warranties and returns. In most instances, your credit company will need a copy of the receipt and proof you were not allowed a refund.

As you may know, interest rates and debt can occur, but the positive effects can make them worthwhile. It’s best to use credit cards for their many benefits, such as building your credit score, cashback programs, travel insurance, minimal fraud liability and prolonged warranties and returns. Just try to refrain from using credit cards as a method to delay paying for an item.

Lindsey Certonio is a project manager at Fullcast, a Silicon Slopes-based, end-to-end RevOps platform that allows companies to design, manage and track the performance of their revenue-generating teams.

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