It goes without saying that credit cards aren’t for everyone – in fact, I think they should only be used by people who pay their balance off each month. If you fit that category, though, you should pay for as many things as you can with your card. Here’s why:
I’ve written before about earning rewards with a credit card, and I still have that miles card that we use most of the time. The annual fee of $25 is more than made up for by the free tickets that we get. But a miles card isn’t right for most people. Free Money Finance is planning on getting 2.6% cash back on his credit card purchases and explains how you can too.
In addition to rewards, there are a couple of other reasons why using a credit card can be helpful. This story at The Consumerist is a good example of the consumer protection offered by credit cards. Basically, the Consumerist reader bought a hard drive at Best Buy but discovered when he got home that the box contained tiles wrapped in newspaper. He went back to the store but the manager refused to accept the return, so the reader contacted American Express and disputed the charge, and Amex obtained the refund for him. I’ve personally never had to do this but it’s nice to know that the option is there.
No monitoring of bank account balances
Glblguy’s debit card was stolen and used to make almost $1,000 worth of purchases. Glglguy, being a good money-manager, caught on to the situation rather quickly and handled it as well as possible. But the part about checking his balance reminded me of why I never use my debit card: I don’t like having to constantly monitor my bank account. Yet without that monitoring, a charge could easily slip through and cause an overdraft. I suppose I could keep a big cushion in my checking account, but that would reduce the interest I’m earning in savings. I have to admit that the stress of possibly overdrawing my checking account would probably cause me to spend less – but I think that stress would be too detrimental to my health.