Benefits of Using a Credit Card


credit cardWhen I first received my debit card I thought, “This is amazing.”  I could access my bank account with a swipe of my card without having to write a check or carry around cash.  There was always an ATM right around the corner if I ever needed cash.  I didn’t see any downside to using this magical card.  If only I had known the benefits of using a credit card…

 

I tried to convince my parents that they needed a debit card too.  Otherwise, they couldn’t survive.  They would normally flatter me and listen to my spiel.  Then, they would usually respond saying they didn’t want to deal with the mess that would happen if their debit card was ever stolen.

 

Looking back, utilizing my debit card exclusively was not very smart.  I have no idea how I didn’t experience identity theft or even worse, somebody emptying out my bank account.  Although I didn’t have much money in my account to actually drain.  But I digress.  

 

Debit Card Disaster
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I use my credit card exclusively now because I once had an unforgettably poor experience when using my debit card.  I was double-charged at a restaurant and had to jump through too many hoops to get the issue resolved.  

 

This incident is forever ingrained in my mind.  A bunch of coworkers and I got together for lunch at a restaurant right around the corner from us.  It was a cheap meal and not particularly good from what I remember.  We ended up splitting the bill four ways and then left vowing not to return.  And that was before we realized the double-charging madness.

 

To add insult to injury, they ended up double-charging everyone in the party.  Whether it was a system error or the waiter trying to get one over on us, my friends were smarter than I was because they had used credit cards.  Their credit card companies were able to quickly resolve the issue for them through a phone call.  

 

credit cardI, on the other hand, was required to fill out forms attesting that the I wasn’t committing fraud.  Then the bank department responded that it would take three to four weeks to review the issue and make a decision.  This was all over a $10 meal.  It hardly seemed worth the effort of filing numerous forms and waiting on a bank specialist to review the matter.  I’m sure it costed the bank more money to refund me after all that paperwork than the amount of the refund itself.

 

That incident motivated me to start using my credit card almost exclusively for purchases.  Although, I still check my bank account on a weekly basis to ensure that nobody has stolen my dormant debit card to make purchases.  While I have not run into any further problems with my debit card, I have dealt with fraudulent charges with my credit card.  They have been easy fixes though because of fraud protection.  

 

Credit Card Pros

Now that I primarily use a credit card to pay for expenses, I have learned about additional services that most credit card companies provide that most consumers do not know about.  Here are four of the best reasons to use a credit card.

  1. credit cardExtended Warranty

Along with fraud protection, many credit cards offer free extended warranties.  Often times, these warranties are a year or more depending on the purchase.  This means if you have a Samsung or iPhone, its warranty could be extended an additional year.  You can now relax knowing you might have additional coverage if you drop or damage your phone.

 

  1.  Purchase Protection

Another thing that isn’t well advertised is that credit card companies offer free purchase protection.  Depending on the credit card company, you can receive coverage between $500 and $1,000 for theft and damage of your purchased item within 90 days.

 

  1.  Rental Car Coverage

Did you know that your credit card also offers rental car coverage?  No need to waste money paying for collision damage waivers or loss damage waivers, which often increase the price by $10 to $30.   Besides, if you own a car, you have car insurance through your insurance company.

 

  1.  credit cardTravel Insurance

Finally, did you know buried in the fine print, that some credit card companies will offer travel insurance for free?  This includes protection if you miss a flight because of an unfortunate incident that lands you in the emergency room.  Additionally, if your baggage is lost, depending on how long the baggage is missing, you can potentially be reimbursed by the credit card for the excess of what the airline company offers.  While this is an extensive list of features, NerdWallet will be able to show you exactly which credit cards offer the best protections for you.

 

I can’t say that I’ve been able to use every one of these benefits, but it’s nice knowing that they are available if I ever need them in the future.  Do you still use a debit card?  Or strictly cash?  Share your thoughts below.

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35 Comments

  1. You can also get price assurance on some cards, where if the value of the item drops they’ll give you the difference. Also when traveling internationally with the right card, no foreign transaction fees there’s less cost to currency conversion. Ultimately if you have self restraint credit cards offer the most protection for your purchase.
    Full Time Finance recently posted…How to Increase your Savings RateMy Profile

  2. I have been using my primary credit card for several years now. I try to expense every possible thing (money I spend regardless of method) I can on my Capital One credit card that gives me 1.5% cash bank on any purchase. It has free credit monitoring as well.

    There are two other credit cards that offer even better cash back – Fidelity offers 2% cash back and Citi Double offers 2% cash back.

    I usually cash out a few hundred dollars towards the end of each year. I am thinking of switching to Fidelity given the higher cash back.

    I pay off my credit card balances in full on a monthly basis and have been debt free for several years now.
    Michael recently posted…Stretch A Dime Turns One!My Profile

  3. I rely solely on my credit card as well. It’s nice to maximize the rewards and also benefit from the 30 day float before having to pay off the balance. And yes, the fraud protection is gray because I’ve had that issue a number of times with fraudulent charges or the card being comprised. I always forget about many of the other ancillary benefits too, trip protection could come in handy someday for sure.
    The Green Swan recently posted…The Green StorkMy Profile

  4. I switched from debit to credit as well. I originally switched because of the rewards on credit cards. I could spend the same exact amount of money with the same exact amount of effort (after setting up autopay on the credit card bill) but also get cash back or travel points. The benefits of the fraud protection and other insurance-type benefits were just icing as I discovered them.
    Matt @ Optimize Your Life recently posted…Defeating Decision Fatigue in a World of ChoicesMy Profile

  5. My dad always paid attention to the miles and points games, and it helped that he had a small business that generated a lot of spend, so I essentially grew up being exposed to responsible credit card usage. For a while he had a General Motors credit card that gave you fairly lucrative cash back that could be applied to a car….so my first car was naturally a Chevrolet!
    TJ recently posted…State of the Blog Update After 1 MonthMy Profile

  6. My credit card is used for every single purchase.There really is no reason to use anything else thanks to the security and bonuses offered! You bring up many other features I have forgotten about but that only bolsters the credit card argument. For me the biggest reason is building credit. Higher credit = lower interest rates = more money in my pocket.
    Stefan – The Millennial Budget recently posted…Cash vs. Credit Card: What Should You Use?My Profile

  7. I use a cash back credit, but my wife & I just got a hotel rewards card. If used correctly, credit cards are awesome. To me, debit cards are a hassle. Especially the cash holds that merchants might take until the transaction clears. You are out that money until the hold gets removed which some merchants do not get in a hurry about.
    Josh recently posted…The Importance of Health and WealthMy Profile

    • I almost forgot about that cash holds for transactions. That was super annoying when hotels would put a holding charge/deposit for the rooms.

      So glad to be done with debit cards.

  8. Right on about credit cards – rewards, warranties, insurance, theft/loss protection and a nice cash flow benefit by delaying cash disbursement for purchases…all good stuff that makes CCs the way to go, as long as the balance is paid in full each go-round!

    Nice post!
    FinanciaLibre recently posted…Pain QuotidienMy Profile

  9. I never use my debt card to purchase anything for the reasons you mentioned. As a matter of fact, I don’t even carry my visa debt card anymore due to risk of being stolen. If someone steals your debt card, they can empty your checking account. It’s just too much of a risk.

    So, I only carry two credit cards in my wallet to make any purchases. No cash.
    Mr. All Things Money recently posted…Can You Handle an Early Retirement?My Profile

    • Thanks for sharing. I still carry my debit card but I am reconsidering after reading what you just said.

      I don’t think there is a strong enough reason to keep it in wallet.

      Thanks for sharing

  10. Wow I had no idea credit cards gave that much benefit. I normally just dispute double charges through my credit card companies and they’ve usually resolved the matter in a day or two. I didn’t know that it took that much bureaucracy to get it taken care of had I used a debit card.
    Finance Solver recently posted…4 Tips on Negotiating a Car PriceMy Profile

    • Yeah I don’t think most people are aware how difficult it really is to dispute charges on their debit card. It’s very challenging in comparison to credit cards.

  11. I only use credit cards for all of my purchases. Being able to get rewards for my purchases is an important reason to use my card. I’ll actually even used my credit card rewards points to get student loan rebate checks. So my purchases helped to pay down my student loans! As long as you are responsible with your cards, there’s a lot of benefits to them.

  12. Wow, I have to say, I have somehow never thought of this extremely important benefit to using a credit card! I use a cash back credit card pretty exclusively now for the rewards, but it never even occurred to me that it could be saving me from fraud on my bank account. Which is absurd, because between my corporate card and my personal card, I have had fraud more times than I could possibly count!

  13. Great tips! We also use our credit card whenever possible for added protection and rewards. I’ve heard to avoid debit cards online, but I didn’t realize it could also be an issue at physical establishments. Good to know!

  14. Thank you. So tired of reading about how they’re “bad.” I think credit cards are neutral and can be a wise advantage when used correctly and not abused.

    I like to run my debit card as a credit card at the grocery store. Thank you for not attacking credit cards.

  15. As long as they are paid off each month a good tool to use as a loan so to speak. I don’t use mine to often as I’m saving up in case I need a big purchase. And I don’t make that much money. But I will use it for gas once a month and dining out as gas pays double points and dining triple.
    I did put my purchase when I went to the commissary at an AFB recently. So it is a nice loan I get and will be paid off by the 20th sip I don’t get charged interest
    Doug recently posted…September DividendsMy Profile

  16. I couldn’t agree more with this. My wife and I use a credit card exclusively. I do have a debit card but only use it for the rare time I need to visit an ATM machine. Between the “free” points programs and theft protection, it really is a no brainer IMO. Great post.

  17. Credit cards offer the illusion of protection and rewards, but hidden deep down is the fact that most ppl aren’t savy with their credit and abuse the available funds, getting themselves in trouble and drowning in debt. If use one, but it’s paid off every month. If you carry a balance, they will destroy you. Just my .02 sense.

    • I totally agree with you. A credit card is a tool like anything else in life. If you use it correctly it’s incredibly powerful. If you misuse it, you will be in deep trouble. Thanks for sharing!!!

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