Why I Love Using Credit Cards

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Credit CardsI know, I know. Half of you want to pelt something at me after reading the headline. The majority of the rest of you question my sanity, especially after climbing out of credit card debt years ago. A few of you know where I’m going with this and are already smiling.

If you did not get a chance to read Grayson’s post from a few weeks back on Why Credit Cards are not Evil, then go ahead and check it out. I forgive you. 😉 That post spawned a few interesting comments, as I expected it would, as well as an email exchange between Grayson and a reader.

My desire isn’t to rehash the issue, but really to cover it from a different angle. First off, let me disclose that I am speaking as someone who had $25,000 in credit card debt…and it was 15 years ago to boot. That said, I don’t know what it would equate to in current day dollars, but the fact is I love using credit cards. Before you decide to chuck a digital stone at me, hear me out.

Growing Your Wealth Means Using Applicable Tools

Seeing as we’re all about helping you grow your wealth on this site, part of that is about using tools. I don’t know about you, but I don’t know everything (though my wife may say I claim that I do) nor do I have all the resources needed to accomplish what I want. That is where tools come in.

Think of it like investing in the stock market. I’m a dork, so I’d love to spend hours a day pouring over company annual reports to decide which ones I should invest in. There is a problem with that though…I have a life and a business that I help run, so I don’t have that kind of time. Instead of wasting all that time, I use stock screeners to help me narrow down what might be a justifiable investment for me in a fraction of the time. I believe the same argument could be made by using index funds as well. I love those tools because they save me considerable time.

I think of credit cards sort of in the same light. They’re a tool that my family uses to help grow our wealth, which I’ll get into a little more below. With that being said, I love credit cards because they’re a part of an overall financial toolbox that help my family accomplish the things we want.

Credit Cards Offer Protection

A more practical reason why I love using credit cards is the protections they often offer. I know that sounds a bit odd since we tend to view credit card companies as villainous leaches who never give. However many, though not all, credit card issuers offer numerous hidden benefits.

Have you ever purchased something that is defective or had a dispute with a vendor and needed a refund? Many credit card companies will step in and work on your behalf. If you use cash or a debit card, you’d possibly be out that money until you get it resolved…if that happens. It is important to point out though, that these protections vary by bank, but many credit cards do offer quite a bit in terms of purchase protection.

This is close to protection, but have you ever tried to book a hotel, rent a car or anything else travel related using cash or a debit card? It can be a hassle, to say the least. If you use a debit card then they put a hold on your account which means I get to wait until the hold falls off. What I love about using credit cards in this situation though is you don’t deal with that at all whatsoever. You simply use the credit card and everyone goes on their merry way. No need to worry about if you have enough cash in your account or anything like that. That, of course, is assuming you pay your card off each month though. 🙂

Credit Cards Provide Me Free Money

I saved this one for last…on purpose. 🙂  Likely the main reason why I love using credit cards, like the US Air credit card, is the benefits I get out of them. Some make the argument that churning credit cards is only going to tempt you to spend foolishly. I get that and can see how it would be a temptation. If you deal with that then churning credit cards is NOT for you.

However, if that is not a temptation you deal with then there can be money you can earn for your everyday and planned spending. My wife and I bought couches a few months ago. Having that planned for months, we used a credit card to make said purchase. Through that purchase we got back enough points to fund most of a four day vacation for us this fall. This was all for our normal spending. Now, instead of ponying up roughly $1,000 for the lodging and gas we can use our credit card rewards points and save the money we would’ve spent for something else.

We’re also doing the same thing with FinCon this year. We churned cards to pay for our trip there instead of having to pony up the cash. Looking back at what we’ve earned since the beginning of the year we’ve scored thousands of dollars worth of free travel or cash back all for something we’d already be doing anyway. That said, I know there are some who earn much more than we do, but that is why I love using credit cards; rewards points work the same for everyone whether you set your goals high or low.

 

Do you churn credit cards? Why do you love or hate using credit cards? Have you ever had to dispute a purchase and had a credit card come through to protect you?

 

Photo courtesy of: Tax Rebate.org

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28 COMMENTS

  1. We have been pretty anti-credit card for years – the ONE principle we picked up from Dave Ramsey that actually stuck. But my husband travels a lot for business and actually needs a personal, international credit card and so we now have one that helps us build up rewards. We haven’t flown to see family in two years because we don’t have the funds, but our new credit card will change that (because of the airline miles).

    Our debt is not from credit cards, so for now, I feel pretty comfortable with our strategy.
    Kirsten @ Indebtedmom recently posted…Do As I Say: Windfall EditionMy Profile

    • Dave Ramsey is just plain wrong on credit cards… he is only right if a person does not know how to use a responsibily credit card and I guess can agree that most people do not know how to use a credit card responsibily. But otherwise it’s one of the best financial tools out there after banks and investment accounts.

  2. I am not organized enough in my life to figure out how to churn cards; however, I am a big fan of credit cards. When you use them as a strategic tool in your overall family spending plan, then they provide numerous values. I hate that they get a bad rap from people who misuse and overspend. It’s not the credit card’s fault that someone spends more than they make.
    Shannon @ Financially Blonde recently posted…Music Mondays – Miss IndependentMy Profile

    • “It’s not the credit card’s fault that someone spends more than they make.” I could not agree more Shannon. We make the choices to spend, not the issuing banks. That said, I’ve got a post coming in a few weeks that gives some simple tips on organizing things for churning. It’s very important to do and if I wasn’t doing that then I wouldn’t be churning as much as I am.
      John recently posted…How to Save Money on Your Summer WeddingMy Profile

  3. I’m with you on this. I just started getting into credit card churning, and it’s fun! Obviously if you are not able to use cards responsibly to your advantage, then you should stay away from them. For those of us who feel confident in our ability to utilize credit cards wisely, I say why not?
    Lauren recently posted…Battling Clutter: A Plan of AttackMy Profile

  4. I’ve used credit cards ever since I was 16. They really are a convenient way to reduce the size of your wallet, get great rewards, and free warranties if you are able to use self control and not go crazy with the spending. They are great tools if used properly!

  5. I don’t churn credit cards, but I do use them to get rewards instead of my debit card. I make my budget and make sure I don’t spend more that I budgeted and that way I can pay it off at the end of the month. I haven’t paid a penny in interest in over a year. So as long as you know how to use them, I think they’re a good tool to have.
    Aldo @ MillionDollarNinja recently posted…Why You Need an Emergency FundMy Profile

  6. We’ve churned one credit card. It was an airline card that offered a bunch of free miles. We used them to fly free for our honeymoon.

    But overall, we just use credit cards wisely. I sign up for the quarterly 5% bonus and use that card in the right circumstances. I also have a card that pays me 6% cash back for groceries, so I do a lot of gift card buying at the grocery store. I then take this cash back and throw it into an investment account for a down payment on our next house.

    We just started this account (before the money was just used to pay off the monthly credit card balance) but it is growing nicely without really putting any other money into it.

  7. I love Credit cards… best thing since sliced bread. I go for the ones that can end up as frequent flyer miles. You are correct that credit cards should be used by only those who can control their spending. If you can’t then forget it. Worse, if you can’t pay your credit bills on time and become a revolver, don’t even entertain the thought of having a credit card. If most Americans saw the great deal they get with a credit card AND knew how to use them responsibily, they would fall in love with them like I do! They would be able to fight the banks that they hate so much! Instead, they allow themselves to turn into revolvers subsidizing the rest of us who just use common sense (so much so that the credit card companies call us “dead beats” and “free riders”!

    For those who can be diligent with monitoring their credit cards (very easy these days with tools like Mint), can live within budgets (again, very easy with tools like mint) and do not have a problem paying off bills before due date, you have the best business deal ever!

    1. Free 30 day accounts payable loan
    2. Convenience of payment
    3. Protection from fraud or overcharges – you can always dispute. If cash is lost or debit cards are used or money withdrawn from a checking account, you have absolutely no avenue for recourse. When I went to India this year (for free using miles ofcourse), I used my credit card for all transactions (no foriegn fees on most airline cards) and when I came back, I instructed the card company to block all foreign transactions (I’ve heard of people’s cards getting misused while abroad). With tools like mint, you can also add alerts to send text messages whenever there is a spend of certain amount…so there are great free monitoring tools out there.
    4. SAVE MONEY! Credit cards with miles or points that can be converted to miles offer the best deals… me and my wife have saved over $15,000 bucks on airline tickets and have spent not more than $300 on the annual fee. Infact, we’re going to San francisco this July 4th for a vacation and saved $1050 for both of us by using my miles and adding her as a companion on my trip. We have this offer where she can be a free companion on any southwest flight till the end of 2015. I keep an eye for credit card bonuses and when I see them, I apply, get the miles and stack ’em up for future use. Just cancel the card or downgrade before the annual fee comes up. Rinse and repeat.

  8. They really are great tools once they are used responsibly. We charge everything possible on our credit cards to maximize the reward points and also as you mentioned for consumer protection reasons. We’ve redeemed travel vouchers, gift certificates and much more. I enjoy drinks from Starbucks but I haven’t used my own money in years because we always get the $50 gc’s from our rewards points. If I could charge my rent to my cc I’d do it in a flash!
    Kassandra recently posted…Are You and Your Bank In Love?My Profile

  9. Even though I had some credit card debt trouble after college, I haven’t been scared away from credit cards altogether. The rewards are great if you have the discipline not to carry a balance. We have used a rewards card for years to manage bills and get perks like free restaurant gift cards and extra discounts at certain stores.

    Now I am definitely looking at the Barclaycard. My sister-in-law in England just got engaged, and our family of four will be flying over for the wedding a year from now. Plane tickets are running about $1100 each! Needless to say, I am looking to save money any way we can! I’m simultaneously overwhelmed and looking forward to the challenge.
    Jennifer Roberts recently posted…Good Buys: Favorite Baby Products and How I SavedMy Profile

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