Those who know me well know that I’m constantly working on some sort of new project (like writing a book), developing a new area of expertise (like my three random years of DJing), or finding new ways to optimize, automate, or improve different areas of my life (like my morning routine or my approach to setting new year’s resolutions).

One area I’m particularly passionate about, though, is finance. (Well, personal finance, anyway. I was eternally grateful to get a C in my Business Finance 201 course in college—balance sheets and corporate ledgers are definitely *not* my passion).

But when it comes to personal finance, I get an odd sense of satisfaction by finding new ways to simplify, optimize, and maximize my money. Over the years, I’ve developed a pretty solid system that yields thousands of dollars of “free” money each year, builds and protects a solid credit score, puts savings away for a variety of goals, prepares for retirement with some pretty aggressive investments, and keeps me on top of my spending with minimal effort.

In this post, though, we’re going all-in on one of my favorite inventions of the 21st century: credit cards.

Before I go any further, though, let me be clear on one thing: credit cards are awesome if you use them wisely. If you spend more than you earn and/or carry a balance, they will destroy your wealth, confidence, and financial freedom in a heartbeat. If you find the illusion of “unlimited funds” difficult to resist (and there’s no shame in admitting that—you know who you are), stick with debit cards and cash. None of the benefits below will outweigh the interest you pay on a carried balance.

Now that we have that out of the way, I present to you:

The Top 10 Reasons I Buy Everything on a Credit Card (and why you should, too.)

1. Free Money

Play your cards right (ha, get it?) and you can easily score 3–5% cash back on a good chunk of what you’re going to buy anyway. Credit card companies get paid by the merchant when you use their card, so they offer a whole slew of incentives to get you to use theirs over another. This makes life awesome for you, the buyer.

There are no shortage of rewards cards out there, and which one(s) you choose will depend on your goals. If you like to travel, get an airline and/or hotel card to rack up points faster. If you love to shop, retailers like Nordstrom offer cards that earn you “cash” over time for use in their store. If you eat food, the American Express Blue Cash Everyday® card gives you 3% cash back on groceries with no annual fee (that’s not an affiliate link—I just discovered it and am eyeing it right now…).

Personally, I prefer straight cash over use-specific rewards, so my current weapons of choice are as follows:

Citi Forward (~3% “cash back” on all purchases, in the form of Amazon credit—unfortunately, this card is no longer available. I’m “grandfathered in.”)

Discover It (5% cash back on categories that change every 3 months)

PenFed Platinum Cash Rewards (5% cash back on gas—also discontinued 🙁 )

The key here is to identify the areas you spend the most money, and find cards that maximize cash back for those specific expenses.

For example:

I use the PenFed Platinum Cash Rewards card exclusively for gas, because it pays 5% right back into my bank account. That’s $1.50 every time I fill up, which doesn’t seem like much, but it’s literally free money, and adds up over time (about $40 for me last year).

I use my Discover It card whenever I’m buying something in their current 5% cash back category. For the past several years, they do 5% back at Amazon.com from October–December. Since that’s when I’m buying all my Christmas gifts already, I rack up another ~$75 of free money each year right there.

And finally, I use my Citi Forward card everywhere else, because while they don’t market a clear percent-cash-back, the average “cash-back” equivalent I get seems to hover around 3%. (The card can be linked to Amazon.com to redeem points for cash, which seems to yield me $150-$200 of free money each year).

(Speaking of Amazon, if you’re a Prime member, I highly recommend the Amazon Prime Rewards Visa as you get 5% cash back on all Amazon purchases. Since everyone buys everything from Amazon nowadays, that’s a pretty sweet gig.)

Add all that up and I get nearly $300 of free money, each year, by using credit cards.

Getting paid to spend money I’m going to spend anyway? Sign me up.

2. Price Protection

Most people know about cash-back or reward-points benefits, but a less-discussed perk is the Price Protection benefit many cards offer. Find a lower price on an item you purchased with in 60 days (Citi) or 90 days (Discover), and they will refund you the difference. No joke.

The caveat here is that you have to go through the claims process which is somewhat time-consuming, but new apps like Sift, Paribus, and Earny automatically track your purchases and prices, and even file for a refund automatically (though Earny takes 25% of the refund amount…). Since Amazon changes their prices all the time, I get price-reduction notifications on the regular.

3. Extended Return Policies

Another little-known benefit many cards offer: extended return policies. I used this benefit a couple of years ago when I bought a pair of boots from an online retailer, didn’t wear them, but forgot to return them within the 30-day window.

When I finally tried to return them (80 days later…), the company (obviously) refused to give me a refund. I then remembered that I had used my Discover card, and that they offer a Return Guarantee of 90 days. I reached out, mailed the boots to them, and received a check for the full amount in the mail. Love it.

4. Extended Warranties

Ever had a product fail on you just outside the warranty window? Many credit cards offer extended warranties as well. My Discover card gives me 1 additional year on any warranty 3 years or less, and my Citi card gives me 1 additional year on any warranty 5 years or less. Pretty sweet.

5. Reimbursement for Theft or Damage

If all of the above perks aren’t enough, many cards offer Purchase Protection benefits, such as guarding against theft or damage. No joke. My Discover card will pay up to $500 for a stolen or damaged item for up to 90 days after purchase, and my Citi card will cover up to $1,000 up to 120 days after purchase. Some limitations obviously apply, but—again—how awesome is that?

6. $0 Fraud Liability

A once-common misconception of credit cards is that they’re unsafe. What if someone steals your card and spends $10,000 that you don’t have? In truth, credit cards are far safer than debit cards or cash. If someone steals your credit card, your bank account remains untouched. Card companies typically spot fraudulent charges and notify you of something fishy, but if you spot something yourself, you simply report it, they investigate it, and the charge vanishes from your account.

If someone makes a fraudulent charge to your debit card, that money is gone instantly. It’s also tough—if not impossible—to get back. Even if the bank does get you some of the money back, it will take time. If you needed that money to make a rent payment or pay a bill, you’re going to be in a tough spot.

7. Travel & Emergency Assistance and Insurance

This is a benefit I’ve yet to use, but two of my cards offer significant travel insurance and support.

For example, my Citi card will reimburse up to $1,500 per person if a trip I’ve planned is cancelled or interrupted for reasons such as illness or injury, death of a family member, natural disasters that stop travel for at least 24 hours, and more.

They also offer emergency assistance while abroad, such as 24/7 help with emergency travel arrangements; help locating lost luggage; finding and dispatching local translators, doctors, dentists, etc. to your location; and much more.

8. Building Credit

One of the more commonly known benefits is that using credit cards responsibly helps you build good credit (which, in turn, helps you to get better interest rates for a mortgage, car loan, etc. in the future).

While using credit cards is not the only thing you need to do to build excellent credit, using multiple (while keeping your credit usage under 30% of your total available credit) plays an important role.

9. Tracking, Categorizing, and Budgeting

Yet another reason to put everything on a credit card? It’s far easier to track, categorize, and manage. If you aren’t using Mint yet, sign up today. (Seriously, open a new tab and sign up right now). It will change your life. I’ve been using it for over eight years now and it’s the only way I stay sane with my money.

Mint works, however, because credit cards (and debit cards, to be fair), record the merchant for each charge, which enables the service to categorize each as “groceries,” “movies,” “gas,” etc. If you pay cash for something, it’ll never show up on Mint. (And I’m not about to manually enter in my cash expenses).

Putting everything on a credit card automates about 90% of your budgeting. Hop into Mint once a week, tweak the categorizations to make sure they’re accurate, and you have beautiful charts and graphs showing you exactly where your money went that week/month/year.

10. Convenience

Last but not least (and certainly not a surprise), I use credit cards because they’re convenient. This is a given in today’s world (and applies to debit cards as well), but man is it nice to have access to all your money with one little piece of plastic. (Or better yet: the contactless payment chip in your phone). Forget cash, coins, and checks—one physical card is all I need 99.9% of the time.

I also have all of my utilities on auto-pay with my card, and my credit card is on auto-pay, so all I need to worry about is keeping enough cash in my checking account and everything else takes care of itself. Gotta love it.

Okay, so is there no place for debit cards or cash?

As much as I love credit cards, there are still times when using a debit card, or cold-hard cash, can be beneficial.

First, (as discussed at the beginning of this article), the danger of credit cards is that they allow you to spend more than you actually have. If you find yourself doing this (or even getting close), switching to a debit card is a wise move. If you try to use a debit card to spend more than you have, the card will simply get declined. (Provided you turned off overdraft protection, which you should, cuz those fees suck). Use a credit card to spend more than you have, and you start paying interest on the “loaned” money (and credit card interest rates will bleed you dry).

Second, paying with cash can make spending more painful (and that’s a good thing). Swiping a card for $500 is much easier than physically handing over $500 in cold, hard cash. If you find yourself swiping that card (credit or debit) a little too freely, consider going on a cash-only diet for a couple of days or weeks to be reminded what shelling over your hard-earned cash actually feels like.

 

What cards do you use? What benefits do you take advantage of? Since two of the three cards I swear by are no longer available, add your recommendations in the comments below!

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