CCARDUS (12/15/13) — Many shoppers are fully aware of the dangers of making too many credit card purchases during the holiday season. Though it's important to avoid accumulating debt, there are advantages to using credit cards throughout the year, including during the popular holiday shopping season.

* Cardholders can earn rewards. Paying in cash or with debit cards rarely earns shoppers any rewards. However, many credit card companies now reward responsible cardholders for using their credit cards. Some cards allow cardholders to get a percentage of cash back on each of their purchases, figures that can add up to a significant amount of money over time. Other cards reward cardholders with discounts on air travel or offer gift cards with a predetermined amount of money on them. Some cards even reward especially qualified applicants just for signing up, offering bonuses that can be as high as a few hundred dollars.

* Cardholders can pad their portfolios. Shoppers with strong credit histories and a grasp of the financial markets might be able to find a credit card that invests a certain percentage of their purchases. Such cards are essentially the same as cash back cards, only instead of getting the cash back from their credit card companies, cardholders have that cash deposited into an investment account. Such cards typically offer a higher percentage of cash back per purchase than more standard cash back rewards cards.

* Credit cards offer more security than debit cards. Security is another advantage of credit cards. When a debit card is used fraudulently, that money is immediately taken out of a cardholder's account just as it would be when the card is used legally. Though account holders are likely to recover those funds eventually, they do not have those funds at their disposal until the situation is resolved, which can take as little as a few days to much, much longer. However, when credit cards are used fraudulently, cardholders simply notify their companies and the charges being disputed do not need to be paid until the issue has been resolved. Card numbers can be stolen at any time by anyone, be it store clerks at the mall or hackers peeking at your online purchases. Credit cards offer more security than debit cards when making such purchases.

* Credit cards offer more insurance than debit cards. Though gifts for friends and family may account for the bulk of holiday budgets, consumers still make additional purchases during the holiday season. Using credit cards to rent vehicles, purchase airline tickets and buy products for your home may help you save money in the long run. For example, when using a major credit card to rent a car, chances are that car is already being insured by your credit card provider, which can save you substantial amounts of money on costly rental company insurance policies. Many credit cards also provide travel insurance to protect cardholders who financed their trips using their credit cards. Such protections can come in handy for consumers who travel a lot during the holiday season.

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Posted on 2/2/14

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