5 Times You’ll Be Glad to Have Paid Using a Credit Card

Owning a credit card is a big responsibly that can sometimes be confusing for those with little experience. There are several situations where credit is a great option, but there are many in which it may hurt you in the long run. Here are some of the best times to use plastic when you want to get the most in return.

Rewards

If you have a rewards card, it may be beneficial to use your credit card even when cash or debit are available options. Using your card when possible will help your reward total add up more quickly. Only use your card responsibly when you are fully capable of paying the charge.

Repairing Credit

If you need to build or repair your credit, using your card at these times is a wise decision. Just like your rewards card, you can choose to do this even when other payment options are at your disposal. Make sure that the benefits of using your card in this way are worth the potential risks.

Large Purchases

Though it may seem risky, buying items such as high-end electronics may best be paid using credit cards. Most credit card companies provide protections that can be advantageous when making large purchases. Such protections may include fraud coverage in addition to the chance to dispute any charges in the event of errors. Many cards may even provide automatic extended warranties on some purchases. For rewards cards, large purchases can also significantly help add to the rewards total.

Travelling

Hotels often require credit cards to hold reservations, and your card may feature travel insurance coverage. If you have a frequent flyer card, the distance you fly will be rewarded to you upon future travels. You may also get cash rewards for any travel-related purchases.

Online Purchases

When shopping on the Internet, using your card makes the process easy, but it may also protect you from fraudulent activity. Many cards protect you in the event your card or information are stolen, and they may provide additional coverage if your items arrive damaged or don’t come at all. Be sure to use your card only on secure sites, and be careful when providing personal information.

There are many situations when using your credit card will bring significant benefits, but remember a few rules before you get too excited. First, check your credit card policies before attempting to use your card in any scenario as not all cards can be used the same way. Also, remember to pay off every charge by the end of the payment period to avoid paying big time for a small forgotten purchase.

 

Debt Unicorn

I’m convinced whoever decided to draw a horn on a horse, and call it a unicorn, is also responsible for fabricating the idea that debt is a reasonable way of life. Seriously, it takes a very creative mind, or at least a lot of drugs, to make unicorns and debt popular. It boggles my mind.

I think debt is rooted in complacency (whoa that sounded kinda deep). There is nothing wrong with being content, but complacency frustrates me. Credit card debt, flat screen TVs, new cars, an overpriced home, stainless steel appliances, are unfortunately where prestige is sought. Keepin’ up with the Joneses is the American Dream. People with $40K annual incomes are living a six-figure lifestyle.

Don’t get me wrong, I have no beef with nice homes, luxury vehicles, energy efficient appliances. Actually, I think they are all awesome, and one day, I hope to own these things, but guess what…. I don’t. I refuse to conform to the norms of society, when those “norms” are self destructive.

I drool at the sight of a plasma TV, but realize that the benefits of the TV (high definition/sexiness), don’t even come close to outweighing the negatives (decrease in net worth, more TV watching=less productivity, a desire to then increase sound equipment/dvd player/etc). So although the Joneses may have a plasma in every room of their house, I know that my life is actually better without.

Look at this picture of a Unicorn and tell me that’s not one crazy looking animal…

Now look at your credit card statement, and tell me your balance isn’t even more crazy! You can hang out with the Joneses all you’d like, but I think I’m gonna keep kickin’ it with my PF homies and increasing my quality of life.

Why do you think America has become complacent with debt? Where did we go wrong? Has it ALWAYS been this way? Do you think we learned anything from the recent recession?

I hate cash

Screen shot 2009-12-03 at Dec 3, 2009, 10.10.43 PMHave you heard people say “Don’t use plastic because you tend to spend more money when you do.”? That is another piece of financial wisdom I have decided to ignore. I never carry cash on me, and when I do get some greenbacks, I take it straight to the bank to deposit. A lot of PFers, Dave Ramsey included, preach the wonders of being on a “cash only” system. Their main argument is this: People tend to spend less when they pay with cash because giving tangible money tends to ‘hurt’ more than swiping a card.

I am absolutely, positively, 102% against the ‘all cash’ plan. It just doesn’t work for me. I’m a pretty disciplined dude, but dollar bills are my kryptonite. They sit in my wallet, taunting me, whispering from my right butt-cheek “Hey Ninja, why don’t you put me to use and walk over to Rite Aid and buy a tub of  ice cream?” Seriously, cash is evil. If I have it on me, it will most likely be spent on unnecessary, unbudgeted, and unsmart things (I love making up words).

For me, it ‘hurts’ a zillion times more to put it on my credit card. I pay my CC balance in full each month. Do you know what that means? I get to watch the damage accumulate over my 30 day billing cycle. As the balance grows, I become more and more frugal. Paying between $1,000 to $1,500 each due date, totally motivates me to minimize my spending so I have to pay less on my CC balance. Seeing the damage in it’s entirety, as oppposed to incrementally, influences wise spending choices.

I’ll be honest. I don’t have the discipline (or the desire) to work an envelope system. With the envelope system, you put X amount of cash in the “groceries” envelope and use that as your guide for the entire month. If you run out of grocery money, you starve (or borrow from another category envelope). If you have the discipline to stick to your budget ALL OF THE TIME, than the envelope system is definitely something you should consider. But if you haven’t noticed, I’m kind of a bada$$ and I sometimes like to spend outside of my budgeted parameters. Envelope system=good for people who have a lot of discipline. Envelope system=ineffective for 99% of the US population.

What about you all, Do you prefer using cash or a card? How much cash do you keep on you at any given time? Do you think you spend more when you swipe? Anyone out their like-minded and struggle to keep cash in their wallet?