I 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