Despite getting a really bad rap, credit cards actually have a lot of advantages to them. Of course it all depends on how wisely you use them, but as a wise (and financially responsible) friend of mine pointed out, credit cards can be a good thing, depending on how wisely you use them.
They are safer than cash.
If you lose cash, it’s lost. There’s nowhere to call and cancel it so that it can’t be used by someone else. But if you lose a credit card, you will only be liable for a small amount, depending on the card. Just make sure that you have the number to call, along with your account number! In fact, it’s a good idea to photocopy, front and back, all the documents you carry in your wallet. Keep the photocopy in a safe place however, as it will be a goldmine of valuable information. They also offer more protection against fraudulent purchases than debit cards.
They are easier to track than cash.
Every month you will get your credit card statement, and you’ll be able to track exactly where your money is going. This is my main problem with cash, in fact; I often forget what I spent it on.
You can get rewards systems.
Credit cards offer a ton of different rewards programs, and depending on what your needs are, you can be handsomely rewarded. If I still lived in the United States, I would choose a rewards program that offered free airline miles.
Credit cards offer ease of purchase.
They make it easier to buy things. This is, of course a problem, if what you are buying is not necessary. But have you ever tried to buy an airplane ticket without a credit card? I have, and even my debit cards won’t cut it, for a variety of reasons.
Building a credit history.
If you move to the United States from France, for example, you won’t have any history of credit. This can be a problem for a great number of things, including renting or buying property. Think it doesn’t matter? Try renting an apartment without credit history, or getting a phone connected.
Emergency funds are useful things, but what happens if you have an emergency without having the money to pay cash? Credit cards can help you out of a tight spot- just don’t rely on them for things that aren’t real emergencies.
On the other hand… we all know the negatives of using credit cards.
Spending money isn’t always easy.
There aren’t any spending limits on cash- you can buy whatever you want, for as little as you want. No merchant is going to stop you from buying pack of gum with cash. They might not let you do so with a credit card, which might mean that you buy more.
And the interest! The penalties! The fees!
For me, the negatives of credit cards outweigh the positives. I don’t feel that I can really trust myself to use credit cards responsibly, so I don’t. Luckily my bank cards offer many of the same protections and advantages I talked about above without the negatives and risks involved.
Do you use credit cards? What are the advantages and disadvantages you see involved?