8 Reasons To Use Your Credit Card

by Ron Haynes

Since I started this blog in 2007, I’ve spend a lot of time and energy writing about the dangers of irresponsible credit card use. I fought many personal battles with those little pieces of plastic and while I’m still wary (with good reason), credit CAN be used responsibly. In many cases, you may actually be better off paying with credit over debit. There are a lot of ways that credit cards come out on top.

Good reasons to use your credit card

1. Cash Back Programs

If you sign up for the right card, you can earn anywhere from 1-5% back on your purchases. Best choice in my opinion? The Discover More Card.

2.  Frequent Flyer Miles

Virtually every airline has at least one credit card. Cardholders can rack up frequent flyer miles at varying rates. Many, like the Southwest Airlines Rapid Rewards® Card from Chase offer a substantial signup bonus to get you started on your way to a free airline ticket. The Southwest card even gives you a birthday present of 3,000 bonus miles each year on your birthday – equal to $50 towards their Wanna-Get-Away Fare.

3. Points for whatever

Many card rewards work on a point system where you earn points per dollar spent. When you reach a certain point threshold, you can redeem your points for gifts, travel, hotels, or something from their catalog. A good choice in my opinion is the American Express Premier Rewards Gold Card.

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4. Safety

Paying with credit cards can make it easier to avoid fraud. When your debit card is used fraudulently, the money is missing from your account instantly and may take a while to get back unless you deal with a very reputable bank like PerkStreet. Any scheduled payments or checks may bounce, causing NSF’s and making your creditors (and you) very unhappy.

By contrast, if your credit card is used fraudulently, you won’t be out any cash – you just notify your credit card company of the fraud and the credit card company resolves it.

5. Holding onto cash

When you make a purchase with your debit card, your money is gone instantly. When you make a credit card purchase, your money stays in your checking account until you pay your credit card bill (hopefully in full). There are two advantages: one, if you pay your credit card from an interest bearing checking account and earn interest on your money during the grace period, the extra interest is yours to keep. Two, when you pay with your card, you don’t have to watch your bank account every day to make sure you’re not overdrawn.

6. Insurance

Most credit cards automatically come with a host of consumer protections that you may not realize you have, such as rental car insurance, travel insurance, and product warranties that may exceed the manufacturer’s warranty.

7. Easier Acceptance

Despite television and radio guru claims, certain purchases ARE more difficult to make with a debit card. Try renting a car or booking a hotel room and you’ll almost always have an easier time with a credit card. Rental car and hotel companies prefer credit cards because it’s easier to charge customers for damages to a car or a room with a credit card. Using a debit card may result in the company putting a hold of several hundred dollars against your checking account to cover those just-in-case events. Also, when traveling in a foreign country, many merchants won’t  accept your debit card, even when it has a  bank or credit card company logo on it.

8. Building Credit

If you have no credit or if you’re trying to improve a poor credit score, using a credit card responsibly will help build your credit score because credit issuers report your payment activity to the credit bureaus. Debit card use doesn’t appear anywhere on your credit report. You can find some great choices for those needing to rebuild their credit on my Credit Card Information page.

Not everything is rainbows, unicorns, butterflies, and sunshine in credit card land. There are fees, there is the potential for late charges, there is the potential for interest charges if you don’t pay your balance in full each month. Many of us abuse them and end up in high interest debt then fight for years to get out of it.

But if you can manage yourself and use your card responsibly (aka like an adult), there are a lot of benefits to using your credit card.

About the author

Ron Haynes has written 1000 articles on The Wisdom Journal.


The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.


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{ 19 comments }

Red E

Using credit cards is like playing with fire; you’re bound to get burned eventually.
Your advice doesn’t take into account human psychology and how likely people are to overspend and get themselves in trouble with credit cards… not wise.

Ron

Trust me, I understand your concern and aversion toward credit cards, but as tempting as it may be to lump all users together, about a third of all cardholders pay their balance in full each month.

The comparison to fire is appropriate. Used responsibly, fire can cook our meals, heat our homes, sterilize medical instruments, heat water for baths and showers, toast marshmallows, and create electricity. It has many wonderful uses. Used irresponsibly, fire can kill, maim, and destroy. Credit cards can be much the same.

It all boils down to the user — can they handle it? Just because some people become arsonists doesn’t mean we should stay away from fire. Neither should we fear credit cards because some people cannot handle them responsibly.

Mike at Home Power Saver

I’m not sure I agree. Or perhaps I’m not human?

I’ve been a long time proponent of no-fee credit card use. You have to have the mindset of never putting more on it than you can pay off in a month. Afterall, obtaining financial security requires some work and diligence. By being diligent in this manner you:

1) Defer payments by about a month allowing interest to accrue in whatever account you ultimately pay from
2) Accumulate rebates/benfits/points/miles/whatever
3) Improve credit scores and credit history (keep one card for a long time!) This positions you to save more when you finance big ticket items.
4) Provides a safety net for true emergencies

I pay for as much as I can on my cards and generally get around a $500 cash back reward each year.

Ron

I dunno, you sound pretty human to me! Great tips btw.

Pamela

I was looking at the Upside card as an option for my daughter who is having trouble getting any kind of credit as she has no credit history at all. I could not find anything on their website that says they report to the credit reporting agencies – am I missing something? Thanks!

Ron

No, you aren’t missing anything — I think I did. UPside apparently doesn’t report (you could ask them by calling 1-866-845-6273). The Public Savings Open Sky Secured Visa Credit Card DOES report to all three credit bureaus though.

Emily

I don’t know. After struggling to get out of debt for so long, I don’t relish the idea of giving another red cent to credit card companies. I see you point though and at some point I may be able to handle credit. But not right now.

Ron

I understand. Just go easy on yourself. There’s absolutely NO requirement that you use a credit card! If you aren’t comfortable with it, don’t do it. Use a PerkStreet debit card instead!

Kelsey

I agree that credit cards can be used to our benefit and not just to the credit card company’s. I have been in debt before, and I dug myself. I didn’t stop using my credit cards, though. I had learned my lesson straight away, and now I put every purchase from my car insurance and phone bills to groceries to movie tickets on my rewards card. I’ve become very disciplined with my money, and I don’t view my credit cards as free money, but as something I have to pay back. I always pay in full, and now it’s bringing in about $20 a month. You just need to be able to control your spending. If you can do that, credit card use can be very beneficial.

Ron

That’s great! I love hearing that people have re-trained themselves to their own advantage. Self-control truly is the basis of success.

Lulu

Kelsey you sound just like me!!!! I put everything on my credit card as well and I almost lost my mind when my apartment set up an online system to pay rent because they do not want to take checks in the office any more.

It really is all about self control and it took me a long time to realize that but I finally did. I love the rewards I get from using my credit cards to pay for everything and since I use ING to pay my cards (every week) I never carry a balance so I don’t pay interest or fees either.

Yes it does take work to set up a system that works for you but once you have it in place it gets easier and after a while you don’t think about it.

People say you spend more when you use credit cards and will not be able to stick to a budget but I manage to stay under my budget every month. It takes discipline but it CAN be done.

Brian

Ron,

I have just recently dug myself out of a $15,ooo hole, (mostly from my college years…okay and a Cancun trip). I swore off Credit Cards as many posting here did. I rember having the ‘feeling’ that being buiried in debt couldn’t happen to me! Before I knew it, more than half of my income was going towards paying just the MINIMUM monthly payments on my many cards. I guess I just had to learn the hard way that we all must life within our means, and budgeting is vital to financial stability. In short, I have learning from my mistakes, and swore to myself that credit cards are the DEVIL!

Your article has me reconsidering that midset. In retrospect I was the problem, not the ‘evil’ credit card company. I was too young to understand the dangers and long term problems associated with credit cards. I always wrote off the reward programs you mention as scams to get you to spend as much as possible, but I really like the idea of charging monthly expenses to a card, letting that money earn interest, and then paying it off in full each month. However, this requires a LOT of self discipline.

On a side note, I really like the fact that you take the time to respond to the comments on this page. It shows that you take ownership of what you write. You don’t see that too often.

Ron

Hey Brian, glad you enjoyed the article. Credit cards are like dynamite – they can be used for good or bad. It all depends on the user. Of course when you light that fuse, it’s important to create some distance between you and the blast!

Mary

I agree that these are all great reasons to use a credit card. I track my credit card spending the same way that I do writing a check.

JoeTaxpayer

Ron – our cash back card funds a 529 account. My year end statement showed we just crossed a $12K balance, expecting it will be $20K by the time my 13 year old starts college.
I suppose cooking is playing with fire as well, but I kinda don’t care for raw meat.

Rachel

As far as I’m concerned, there is absolutely no reason to have a credit card. My husband and I haven’t had a credit card in 10 years. Not one. Not even for emergencies. No one needs a credit card for anything. A need is something you will die if you don’t have it. I’m not dead.

Ray

“No one”??? Obviously you’ve never traveled outside the country and needed a credit card to reserve a hotel room because your hotel in Dubai doesn’t take debit cards. Obviously you’ve never needed to rent a vehicle. You’ve never had a situation where all ATMs were down, or you didn’t have enough cash on hand to pay your client’s dinner tab.

Using your logic, I suppose you don’t have any shoes since they aren’t a “need” according to your narrow definition. Nothing but water, some raw vegetables, a straw hut, and some meager clothing? Maybe a primitive spear to hunt with?

What you need to live your life is far different than what I need to live mine. Watch out for those broad generalizations and realize that some of us are mature enough to handle far bigger responsibilities than others. Just because YOU don’t need a credit card doesn’t mean no one else does either.

Ron

Thanks Ray. But just like you have your viewpoint and want others to be respectful of it, we need to understand and respect Rachel’s view and her desire to live without credit cards.

For many people, the mere idea of going into credit card debt is a bad idea. It’s one thing to point out another’s mistakes but quite another to belittle their ideas. BOTH points if view are valid depending on how you live your life.

I realize you probably pay your bill in full each month but there are many others who find themselves far too tempted to spend money they don’t have when a credit card is in their pocket.

Chris Gold

I generally always make larger purchases with my credit card and pay it off as quickly as I can. As discussed in point #5 I find it better to have cash at my disposal and in this circumstance, I’d rather not hand it over all at once. I try to pay as much as I can as soon as possible so that I don’t get hit with interest but this is another benefit of credit cards. If you’re smart about it and plan the purchase, you can easily pay it off before your balance adjust for interest from that purchase.

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