Although credit cards get a lot of bad press when it comes to personal finances, they do offer a number of positives that, for the right people, make them an excellent financial tool.

The assumption, of course, is that you pay off your credit card balance every month. If you fail to pay off the credit card balance every month, the amount you pay in interest will quickly negate a lot of these advantages. For those who have the discipline to pay off their balance each month, here are 10 great reasons to carry a credit card:

1. Boost Your Credit History and Score

Getting a credit card will help establish and improve your credit history, as well as increase your credit score. Your credit score can affect a wide range of payments, and the better your score, the less you will have to pay. A high credit score may mean you pay an interest rate several points lower on a mortgage loan than the rate someone with a poor credit history would pay; this can mean thousands of dollars in savings over the life of the loan.

The same is true with an auto loan. A good credit score can mean paying less on many insurance products, such as homeowner's insurance and auto insurance. It can even be the difference between getting a job or not, since many employers now pull potential employees' credit scores and eliminate those with poor credit histories. Establishing a good credit rating by showing responsible use of a credit card will mean significant savings during your lifetime compared with those with a poor credit history or none at all.

2. Internet Purchases

Having a credit card can save you money on the items you purchase. Some of the best deals available are now found on the Internet. In many instances, the only way to pay for these Internet purchases is with a credit card. If you don't have a credit card, you may have to pay more for the exact same thing you could have purchased online, not to mention the extra cost of driving to get the item.

3. Emergency Money

A credit card provides you with instant access to money in case of an emergency. Most of us carry around the amount of cash we believe we will need for one particular day and not enough for an emergency. If you're away from home and get stranded late at night and need to get a hotel room, you don't have to worry about whether you have enough cash on hand. A credit card can provide an instant solution to paying off many unexpected expenses until you have the time to transfer the money from your bank account.

4. Rewards

There are many credit cards that provide a reward when you use them. This can be anything from cash back to travel points good for free airline tickets. By using a credit card that gives you an award, you can actually earn money.

5. History of Purchases

For those who are not good at keeping track of their receipts, a credit card gives you a complete and detailed summary of your spending each month without the effort of recording every purchase as you would have to do if you paid in cash. This record can be an easy way to help you create a budget and know where your money is going. It can also be an excellent reference at tax time for charitable deductions.

6. No Fear of Loss or Theft

If you are traveling and you lose your cash or are robbed, you've lost all that money forever. If your credit card is lost or stolen and you report it immediately, you are out a maximum of $50 (and most companies will waive even this fee).

7. Interest-Free Money

Between the time you make a purchase with your credit card and the time you actually pay off your credit card, you have a period of time during which you are actually earning money (if your money is sitting in an interest-bearing account) on something that you have already purchased.

8. Merchant Protection

If you pay in cash when making a purchase and the seller doesn't come through, you're basically out of luck. Your other choice is to pursue getting the money back on your own, which will entail both time and money. If you pay with a credit card, however, you have a good chance of getting your money back, and the credit card company will do the majority of the work. You can simply call the credit card company and dispute the charge. The credit card company will then do an investigation and issue a chargeback if they find in your favor.

9. Insurance on Purchases

Many credit cards provide insurance on items you purchase for a certain time period. You must read the fine print of your credit card's terms of agreement (or give them a call) to see exactly what type of protection your credit card provides. This means if something gets broken, lost or stolen shortly after you purchase it, you can often get your money back. If you paid in cash, it would be gone forever.

10. Convenience When Traveling

Traveling, whether in the U.S. or abroad, costs a lot of money. A credit card provides a convenient way to pay for these travels so that you don't have to carry a large amount of cash with you. A credit card can also provide easy foreign exchange when traveling abroad at rates that are typically better than you can get from banks in the same country (although you need to be careful of foreign exchange fees the credit card may charge).

Credit cards can be wonderful financial tools that offer some great benefits for those who use them to their advantage. If you have the discipline to pay off your balance each month, carrying a credit card makes great financial sense.

Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.

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