Four Advantages to Using a Credit Card

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Dave Ramsey likes to brag that since he doesn’t own a credit card.  Plus, because he no longer has a credit history, his FICO score is zero.  Admittedly, I drank the Dave Ramsey Kool-Aid for a while. I tried to strictly pay cash only. When I couldn’t pay with cash (or forgot to take out enough), I used my debit card.  

 

Related:  The Benefits Of Paying With Cash

 

Honestly, I wish someone had shaken me and told me about the advantages of using a credit card at that time.  My exclusive cash and debit card usage showed how naive I was to not have done further research into Dave Ramsey’s teachings.  I had no idea that by using my debit card could expose me to identity theft and even a liquidated bank account by some nefarious figure.  

 

Debit Card Debacle

If it weren’t for a poor experience using my debit card, I would probably still be using my debit card today.  

 

On one occasion, I was double-charged on my debit card at a Mexican restaurant.  I remember it like yesterday. I got chips and salsa because it seemed like the only safe thing on the menu at this particular restaurant.  While I was starving the rest of the day, let’s just say I got faired better than my colleagues who had eaten every bite of their meals.  That was the first and last time we went to that particular establishment.

 

Soon after, I happened to be reviewing my debit purchases on Personal Capital, when I noticed that I had been double-charged by the restaurant.  Normally, I don’t get too worked up over things, but I was pretty angry.  I think it mostly had to do with the fact that it was an awful restaurant.  

 

I went into work the next day and told my coworkers about how I had gotten double-charged.  In that moment, we realized that all of us had gotten double-charged. We weren’t sure if it was a system glitch or something that our waiter did on purpose, but regardless, we were furious.  

 

Here’s the worst part of all of this.

 

I was the only person who used a debit card.  All of my coworkers had used credit cards.

 

What was the difference?

 

With one phone call, my coworkers were able to have the credit card companies quickly resolve their double-charge issue.  

 

I, on the other hand, could not resolve the issue with a simple phone call.  The bank where my debit card was issue required me to complete multiple forms declaring that I wasn’t committing fraud.  The bank department responded that it would take 3-4 weeks to review the issue and make a decision.

 

This was all over a $10 snack and drink (with a tip).  

 

The amount of effort it took to rectify the issue hardly seemed worth it considering the dollar amount involved.  During that incident, I witnessed the protection and helpfulness that credit card companies offered to their customers.  From then on, I began to exclusively use a credit card for all of my purchases.

 

Related:  How Credit Card Companies Make Money

 

Admittedly, not worrying as much about fraud, theft or dealing with mistakes has been great.

 

Credit Card Pros

Over the years, I have learned some interested additional perks of using a credit card that most consumers may not know about.  

 

Here are 4 advantages to use a credit card that you may not be aware of.

 

1.  Extended Warranty

Yes, you read that right.  Oftentimes, when you use a credit card on a purchase, the credit card company will extend your warranty on the item.  Depending on the item, these warranties can be a year or more.

 

If you’re thinking of making a big purchase like a new phone or laptop, using a credit card is the way to go.

 

2.  Purchase Protection

Credit card companies sometimes even offer free purchase protection.  You may be eligible to receive free additional coverage between $500 and $1,000 for theft or damage of your purchased item within 90 days of the purchase.  Who needs an iPhone case when you have a credit card company backing you (for 90 days, that is)?

 

3.  Rental Car Coverage

This was a shocker to me.  

 

Yes, some credit card companies offer free rental car coverage.  In that case, you would have no need to waste your hard-earned money on a collision damage waiver or loss damage waiver, which often jacks up the price of your rental car by $10 to $30.  The rental car companies try to push this, but you may not need it if you are paying with your credit card. On top of that, if you own a car, you already have car insurance through your insurance company, so there is no reason to pay for collision damage waiver or loss damage waiver when you rent one.

 

4.  Travel Insurance

I saved the best for last.  

 

Did you know, buried in the fine print, some credit card companies offer free travel insurance?  This free travel insurance includes protection including a scenario where you miss a flight because of an incident that lands you in the emergency room.  

 

Additionally, if your baggage is lost, depending on how long the baggage is missing, your credit card company may be able to reimburse you 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 provide the best protections for you.

 

It’s nice to know exactly what your credit card company can provide so that you can take advantage of the benefits, if you find yourself in some sort of predicament.

 

So readers, do you still use a debit card or cash?  Have you utilized any of these benefits before? Share your thoughts below.