RetireTax Group LLC

Establishing credit: This is critical if you ever plan to finance a big purchase, like a house or car. Even most cell phone plans require good credit. You can’t have good credit unless you build a solid track record with a credit card or some other form of credit. Many lenders require two or even three established lines of credit before they will give you a decent mortgage. Just as important, credit allows you flexibility in the case of emergencies. Just like a corporation, individuals need to have outstanding lines of credit in case of a cash crunch. You may never need to use it, but it’s nice to have available.

Travel insurance: Want automatic rental insurance when you rent that car on vacation? Most major credit cards offer a deductible collision insurance policy as long as you charge the purchase to the card. This can save hundreds of dollars off the insurance the rental car agency will try to sell you. The other common insurance normally included is for airline flights. Charge your ticket with your card and get automatic life insurance for the flight.

Cash back/Rewards: Many credit cards now offer a rewards program, often including a cash back bonus based on your spending. Though some cards offer up to 5% on certain purchases, most have an average cash back rate of 1% or less. This is really a great deal: in addition to the ability to defer payment on an item for 30 days, you actually get a kickback for using the card. That’s free money. Other rewards include frequent flyer miles and other bonuses. GM, for example, offers a credit towards the purchase of a new GM car.