3 Top Reasons to Have Credit Cards

by Kay Lynn

all credit cards accepted

One of the points learned at Financial Peace University is that Dave Ramsey doesn’t like credit cards. Even though I’m a fan, I think credit cards are useful tools for responsible money managers.

So, although there have been times in the past when I had too much credit card debt, I rely on them for certain transactions (and it’s not because I don’t have enough money to pay cash).

Fraud Protection

I don’t like to use my debit card in situations where it’s out of my sight.  Although most people are honest all it takes is one dishonest person to cause you big headaches.

At most restaurants your card is taken to another place for processing.  The number can be copied or the card cloned in that time.

Purchase Protection

I recently paid a deposit on next summer’s vacation cruise.  Although I feel safe with our choice, another cruise line went out of business a few weeks ago leaving future guest wondering if they’d get there money back.  They should feel pretty secure if they paid with a credit card.

In a personal incident, a crib I ordered was returned to the warehouse but I couldn’t get it resent or my money refunded.  I refuted the charge and my credit card issuer refunded the money to me after an investigation.

Rewards

There are a variety of credit card rewards program.  The reward is points or money back or some other benefit for every dollar spent with the card.  I have a friend who makes all regular monthly purchases on her card just for the cash back rewards.  By the way, she does pay the balance off every month.

My husband still uses a card he had when we married.  It accrues credits towards the purchase of a GM car.  I’ve been begging him to use something else as we’ll never buy a new car again!

———-$$$$$———-

Using credit cards can be a part of your personal finance strategy.  Do you use credit cards?  Why?

photo credit: TheTruthAbout
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{ 29 comments… read them below or add one }

KaseyS November 1, 2010 at 6:55 am

Those are 3 good reasons…but I could come up with a list of 30 reasons to keep your credit card in your wallet.

I guess you have to balance the differences between having credit cards, using credit cards — and abusing credit cards. Because when you get to that third point – the credit cards end up abusing you.

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Kay Lynn November 3, 2010 at 6:06 am

Kasey, I agree there are two sides to this issue. I don’t use my card for everyday purchases; just for online and large purchases.

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Lisa @ Cent To Save November 1, 2010 at 8:24 am

When I get my debt under control, I will use my Rewards card again. It is a Marriott Rewards card, and we like to use the points for free rooms when we travel. Right now we don’t travel a lot, but we will when the debt is eliminated. But for now…. they are in a closet… hidden.

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Kay Lynn November 3, 2010 at 6:08 am

In a future post, I’ll talk about the cards we have and why. Many of our trips are cruises, so we don’t stay in hotels. A lot of people do use hotel cards.

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Judy November 1, 2010 at 9:45 am

I do! You have some backup in case something you ordered doesn’t arrive or is misrepresented. You have proof of transactions….

~J~

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Kay Lynn November 3, 2010 at 6:09 am

Using a card also makes it easy to get credited back for returns.

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Credit Cards November 1, 2010 at 11:52 am

I know two more reasons that worked well for me.
Firstly me card came with a health insurance which I used in times of need.
Secondly I was stuck at the airport when an urgent ticket could be booked only with a credit card not a debit card, that time I was really thankful of holding one credit card which worked there at the airport.

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Kay Lynn November 3, 2010 at 6:12 am

Credit Cards, I didn’t know cards came with health insurance. I’ll have to check the benefits on my cards.

I was on a business trip once when my grandmother died suddenly and I had to buy my own ticket to go to a different destination than home. I didn’t have a personal card at the time, but fortunately had the business credit card. I paid it back but learned the importance of carrying a credit card then.

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Aloysa November 1, 2010 at 12:35 pm

This is so true. I don’t like credit cards, I wish I woud not be using them but when it comes down to protection, I do use them – travel, hotel reservations, on-line purchases…

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Kay Lynn November 3, 2010 at 6:13 am

Aloysa, I use them for the same purchases plus really large transactions made in person (appliances, etc.).

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Money Reasons November 1, 2010 at 3:56 pm

I like and use credit cards for the reasons you identified above (especially the rewards aspect)!

Credit cards are just tools, nothing more…

I use to have a GM card too a while ago. The older plans still rock, very nice! I used my card to help buy my chevy 2003 malibu new at the time. I don’t use it anymore though… I won’t buy new anymore either (unless I become really, really rich some day… but that doesn’t look likely)… 😐

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Kay Lynn November 3, 2010 at 12:42 pm

Money Reasons – – Good point about cards just being tools. I want to get my husband a rewards card related to travel or something that we actually would use! He’s not as good with change as I’m am 🙂

P.S. I’m not likely to get rich either!

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Mandy November 1, 2010 at 5:08 pm

I do use credit cards and in addition to the reasons you give, I think they’re really convenient. I do pay off the amount each month and it means one reconciliation a month. I’m always afraid with the debit card that there won’t money in my checking account to cover it and I’m not very good about writing down each and every transaction.

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Kay Lynn November 3, 2010 at 12:43 pm

Mandy, one report to reconcile your monthly budget is a great reason for charging all items on the card.

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Darwin's Money November 1, 2010 at 6:47 pm

The hardcore PF types get fired up about credit cards, but I’m unapologetic. I have my wife charge everything (yes, she does most of the spending haha). We then pay it off monthly and keep the $70 or so each month. That’s $1000 tax free each year! On top of the rewards, it’s real easy to categorize where our spending is and track where they money’s going. Can’t do that with cash :>

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Kay Lynn November 3, 2010 at 12:45 pm

Darwin, you’re making the credit cards work for you instead of the other way around. Personal responsibility is really the key.

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Shawanda November 1, 2010 at 8:08 pm

I felt my blood pressure rising when I read your opening statement disagreeing with Dave Ramsey. 🙂 Then I realized giving up credit cards is one thing Dave and I have never been able to see eye to eye on. I’m not giving up my credit card. I’ve gotten too many free hotel stays to sacrifice it. Plus, as you mentioned, there are some other nice perks. One I’ve heard of but never used was the extended warranty. My credit card doubles a manufacturer’s warranty up to 1 year. It also provides insurance on my rental car. Even if it didn’t do any of those things, I still wouldn’t get rid of it. I’ve memorized the card number, security code and expiration date, and I’m not doing that again. 🙂

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Kay Lynn November 3, 2010 at 12:46 pm

Shawanda, so good to see your name in the comment! Yes, I do feel like I’m breaking a rule disagreeing with Dave but he made that rule for people that over spend.

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BruceBucks November 1, 2010 at 10:50 pm

I have a southwest card that I use for traveling purchases. It saves me about $300 a year in traveling expenses. I think protection is a valid benefit of using credit cards. I just hope we all use our cards wisely. Good Post!

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Kay Lynn November 3, 2010 at 12:47 pm

Bruce, I have the same card; I’m a fan of their product so might as well earn free flights!

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Donna Freedman November 2, 2010 at 12:08 am

I just earned another frequent-flier ticket with a rewards card.
A different card earns me Thank-You points (and I get double points for putting my cell phone bill on there). I just ordered $100 worth of Visa gift cards with these points — a Christmas gift for my daughter and son-in-law. This same card offers free trip insurance when I travel and, I just found out, will replace a cell phone if it’s lost or stolen — including the cell phones of family members. Since DD has lost hers, I’m going to take them up on that.
Had I not had a credit card I would not have been able to pay my divorce attorney. As a result I would either have had to take the first offer out of the gate because I couldn’t afford to pay for legal representation.
And I hate to keep beating the same drum, but here goes: If there is a sudden emergency illness in your family and you had to jump on a plane, would you want to be thinking, “Now, is there enough in checking for me to use my debit card to buy a plane ticket AND rent a car? If not, I better transfer some money from savings….Ooops! I don’t have ENOUGH in savings! Guess my loved one will have to live or die without me.”
This has happened to me TWICE, folks. Thank goodness for credit cards.

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Kay Lynn November 3, 2010 at 12:49 pm

Donna, I should check out getting monthly bills set up to autopay with the credit card. Those flights would sure add up fast!

Those are excellent stories about when a credit card can be a positive tool at times of stress. I’ve had to fly suddenly because of family illness as well. We lived in a hotel for 2 weeks with my dad’s final illness. I didn’t have to worry about debit card limits ,etc.

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First Gen American November 2, 2010 at 2:14 am

In addition to those reasons, if I were to make a top 5 list, the other 2 would be:

Traceability – I can never remember where my cash purchases go
I don’t like carrying cash – once you lose your cash, it’s gone for good. Plus I spend my pocket money on the dumbest things. I’d rather not have any.

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Kay Lynn November 3, 2010 at 4:55 pm

First Gen American, I also try to limit the cash I carry. You are right in that it seems to get spent but I can’t remember where! I tried writing them down on envelopes but wasn’t as good as I should be.

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Moneycone November 2, 2010 at 5:34 am

Credit cards are good or bad depending on how you make use of it. Here’s how I look at it. If you are paying off your entire balance each month, it is totally worth it since it is essentially an interest-free loan. Plus depending on your card, you get additional protection like extended warranty, id theft protection, travel insurance etc. Why say no to free rewards?

BTW, first time reader of your blog, love it! 🙂

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Kay Lynn November 3, 2010 at 4:57 pm

Moneycone, you are right in that they are just a tool that if used well, can have lots of benefits.

P.S. Thanks for dropping by. I’m checking your blog out next!

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Khaleef @ KNS Financial November 3, 2010 at 10:18 am

I don’t see a problem with someone using credit cards responsibly. Especially to get rewards or other benefits. It’s just when someone who is lacking discipline decides to try to take advantage of these benefits, and they end up destroying their finances!

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Austin November 9, 2010 at 10:12 am

As @moneycone rightly mentioned above — “If you are paying off your entire balance each month, it is totally worth it since it is essentially an interest-free loan.”

PLUS — I am building up a positive credit history.

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Kay Lynn November 14, 2010 at 12:25 pm

Austin, glad to hear from you! Keep in mind that some credit cards charge interest on the daily balance instead of due date balance.

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