The following post is from Christina of Northern Cheapskate:
photo credit: 401K
If you have ever read Dave Ramsey, you know that he hates credit cards. He encourages people to pay with cash (or a debit card) instead of using the plastic.
Using a cash-only approach can certainly help someone get out of debt and stay out of debt.
But if you are disciplined, there are some positive benefits of carrying a credit card that shouldn’t be ignored.
Rewards
From cash back on your purchases to frequent flyer miles, there are plenty of credit cards on the market that offer rewards. If you put all of your recurring regular expenses on a rewards card (like your utility bill, gas fill-ups, etc) and pay the bill in full every month, you’ll earn hundreds of dollars worth of rewards for just doing what you would normally be doing. Make sure the credit card you choose doesn’t have any minimum purchase requirements to earn rewards or charge exorbitant annual fees, or the rewards won’t be worth it.
Consumer Protection
Some credit cards offer additional consumer protections, such as extended warranties on your purchases. If you have a dispute with a merchant, sometimes your credit card company can help you resolve the issue and get a charge removed.
Rental Car Insurance
If you’re renting a car, hold off on paying for costly insurance until you’ve checked with your credit card company. Some credit card companies offer some rental car insurance protections if you pay for the rental with your credit card.
Special Discounts
Some credit card companies offer special discounts and perks for their customers. Everything from free museum admission to discounted concert tickets are available through special offers. So, find out what your card can offer you.
Foreign Travel
Traveling out of the country? Carry plastic. You won’t have to worry about the exchange rate when you use your credit card. And you won’t have to carry too much cash. Which leads me to my next point…
Cards Can Be Safer Than Cash
Carrying a large sum of cash can make you a target for thieves. And if your cash is lost or stolen, it’s most likely gone forever. On the other hand, if your credit card is lost or stolen, you can quickly cancel the account and contest any charges you didn’t make. It’s a good idea to use credit cards instead of debit cards when making purchases or payments online, as the credit cards offer better protections. Ask your credit company about their fraud alert programs (sometimes you get this service for free) and protect your money from would-be thieves.
Credit cards should never be treated like an emergency fund. You shouldn’t use them to live beyond your means. But when you pay the balance in full every month and take advantage of the positive perks they offer, credit cards can be a useful tool to helping you manage your money.
Do you use credit cards? Why or why not?
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Christina Brown is the creator of Northern Cheapskate, a blog dedicated to frugal living through coupons, freebies, and money-saving ideas. She lives in the rural north woods of Minnesota where she clips coupons, pinches pennies, and chases her three boys (a 6-year-old and twin 4-year olds) as a stay-at-home mom. |
