I was in the US Military for 6 years and I've met A LOT of people who are are either borderline superstitious about credit cards and refuse to use them or just don't know much about them. It's like it has been ingrained into their consciousness that the use of credit cards is synonymous with irresponsibility and incurring debt but that's simply not true. These people just use cash or their debit card predominantly and it's incredibly inefficient. Credit cards are awesome. You just need to be responsible. More on that later. I honestly don't know how many people this post may apply to, but I just wanted to take a quick moment to make a case about how awesome credit cards are.
- You get reward points for spending money. It's anywhere from 2 to 5% depending on which credit card you use. These points basically convert back into dollars in a 1/1 ratio. There are also cards that give you air miles. If you're a frequent traveler and those are very good as well. You're going to be spending money on things regardless of whether you use cash or a credit card so you may as well earn a bit of money back. It's not a lot, but it adds up. For example, I have a card that gives me 5% cash back on purchases I make on Amazon. If I spend 100 dollars on Amazon, I basically get 5 dollars back for no reason. That's pretty solid.
- There's no interest or annual fees. There are plenty of rewards cards out there (Chase Freedom, Citi Double Cash, etc.) that have no annual fees for simply having the card. Just make sure you read the details before applying and activating. As for the interest, you don't pay ANY as long as you are responsible and pay your card balance off in full every month and on time. Additionally, you can set up an auto-pay feature so that you can't even forget to. Just make sure that you're just using the credit card as a cash substitute and that you're not spending money you don't actually have or else things are going to spiral out of control pretty fast.
- It's convenient. It's recommended to carry some cash on hand but, depending on where you live, you really don't need it. On top of that, if you do a majority of your spending with credit cards, you don't have to deal with change and coins either, which are a hassle. I can't remember the last time I had coins bulging in my wallet or jangling in my pockets.
Another perspective is that if you're investing for your retirement, you're expecting an average rate of return of 5 - 8% on your relatively safe, long term investments. If you use credit cards, you're getting back 2 - 5% on all of your expenditures--that's pretty good!
Seriously, don't bother using cash or debit cards any more. Apply for a credit card and use it responsibly. You actually lose nothing and gain 2-5% in rewards points. Spend responsibly and you'll never look back.
November 15, 2020 at 01:05AM
