It seems a little “off” to some people that I like to use credit cards. After all, shouldn’t a personal finance writer be against credit?
The reality is that the use of credit cards doesn’t have to equal debt. In fact, it’s possible to use credit without racking up the debt. So, even though I could live without credit cards, I wouldn’t want to. Here’s why:
Protection: My Money Isn’t On the Line
First of all, my money isn’t on the line when I use credit cards. If I use a credit card to make a purchase, I’m getting a short-term loan. As long as I pay off the balance before interest accrues, I’m not losing anything.
The protection comes in with fraudulent purchases. Last week, one my card issuers called to tell me that there was suspicious activity on my credit card. While we have had some false alarms with our credit cards recently, this wasn’t a false alarm. Instead, it was true fraud.
Of course, none of my own money was ever at risk with the credit card fraud. Many debit users like to point out that debit cards come with many of the same protections as credit cards these days. However, that doesn’t make me feel better when I contemplate the fact that my money has been taken out of my account if fraud is perpetrated using a debit card.
Yes, I will probably get that money back. However, until that money is put back into my account, it’s gone. It could take two days to get that money back, or two weeks. I don’t like the idea of having my money at risk in such a manner, so I use credit cards. That way, it’s someone else’s money at risk when fraudulent purchases are made.
Credit Card Rewards
I also like the idea of credit card rewards. I’ve used two free airplane tickets this year, thanks to credit card rewards. I’ve also redeemed points for numerous gift cards and I’ve even received cash back. I like earning and using credit card rewards.
However, you do have to be careful. Credit card rewards do you little good if you carry a balance and pay interest that amounts to more than the value of your rewards.
Perks that Come with Credit Cards
There are also a number of perks that come with using credit cards. I like the idea of enjoying myself with some of my spending, and credit card perks can contribute to that. It’s possible to get price protection and extended warranty protection with many credit cards. Plus, you can often get travel insurance and rental car insurance. Every time I go on a trip that requires a rental car, I make it a point to use a credit card that comes with coverage. That way, I don’t have to purchase the extra insurance.
Other credit cards come with perks like access to special events, and coupons and discounts. I once got a rental car for half price, due to a credit card perk, and I didn’t have to get the insurance on it, either. It was a great deal.
With a little planning, it’s possible to make the most of credit cards without going into debt.
