Disclaimer: If you are in debt and have problems with controlling your spending, please stop reading and close your browser =)
First of all, I want to say that having a credit card is a privilege. And the reason I say this is because when you use a credit card to pay for something, you are using someone else’s money temporarily.
In this post, I am going to talk about how I have benefited from credit cards. So far, I have been very diligent about controlling my spending, so paying everything with my credit cards is not a problem for me. I do have a high credit limit on all my credit cards. Sometimes, it feels like limitless on the amount of things I can charge to them. However, spending control is what’s important here. If you can control your spending, then credit cards are your best friend!.
Credit Card Gives You Rewards
You have to be careful on this one. Just because you get rewards by using credit cards, it doesn’t mean that you can spend on whatever you like.
Rewards are only great if you have accumulated for a long time. It is like a surprise after 1-2 years you use to pay on your expenses.
I personally charge EVERY single expenses I can to my credit card to earn rewards. Every credit card is different out there. Some will offer you more rewards on Gas and Restaurants, and some on Groceries.
Look at your credit card rewards program and use the ones you can maximize the most. If your credit card does not offer you any rewards, close the account.
You will benefit the rewards for Travels, Shopping, or simply redeeming for cash boost on your holiday shopping.
Built-In Fraud Protection, Insurance, and More!
Another thing that I like about credit cards are the fraud protection. It is simply another level of security compared to your debit card.
Imagine this, if a thieve has access to your debit card, essentially, the thieve has access to your whole bank account! With credit card, the thieve does not have the same access. Most credit card companies (I say Most, because I don’t have ALL credit cards in the world) have fraud protection that will let you go off the hook on charges that you did not authorize.
Credit cards also provide travel insurance if you pay your travel with it. For example, if something happen to you on the day you are supposed to travel, you will be reimbursed by your credit card company for that specific travel related costs. – You will have to provide some documentations and submit your claims on this. They will also provide insurance coverage for your rental car.
Some credit cards like American Express allows you to double your purchase standard warranty. For example, if you purchase a computer with 1 year warranty from the manufacturer, American Express will give you an extra year of warranty. If something happen to it after the first year, American Express will cover it. Sweet!
Having Credit Card Helps with Your Cash Flow
Things Happen! It’s unavoidable. If you are finance savvy, you probably have emergency funds for these expenses. However, sometimes you need more!.
If I have a $10,000 emergency expense that I need to pay, and I only have $10,000 emergency fund, I would not deplete it to zero. Paying with credit card will give me a little more flexibility. Plus, credit card companies will give you about 30 days to pay back.
Overall credit card benefits are awesome. If you are savvy enough, I would say don’t skip on credit cards. You will be able to stretch your finances further in the long run.
Do you use credit cards and pay off every month? Leave us a comment below.