If any of you have heard the name Dave Ramsey, he tells you that you shouldn’t use credit cards. Some may struggle in situations in which a lack of self-control can get you in trouble. However, credit cards can be one of the best tools for day to day finances and create greater peace of mind. Let’s walk through those details.
Disclaimer – I’m going to mention Chase in this article. I receive no compensation from them.
Purchase Protection
Chase’s purchase protection can repair, replace, or reimburse you for eligible items in the event of theft or damage. This protection comes in handy if you’re having issues getting reimbursed from the company you bought the product or service from.
I’ve used this in the past when an event I was going to was canceled; the venue was not cooperating. It wasn’t a large amount, but it’s great to have peace of mind if something goes wrong.
Extended Warranty Protection
Chase also offers extended warranty protection on (most) items purchased with an eligible card. They will give a warranty for an additional 1 year on top of the manufacturer’s. I find this especially handy when it comes to electronics, which will typically come with 1-year warranties. Purchase a nice pair of AirPods that go south? This type of protection will put that money back in your pocket. Again, this is great peace of mind to have so you can buy those high-quality things knowing that you’ll be getting the value you paid for. NerdWallet has a great little guide here.
Fraud Protection
With debit cards, many banks will still work with you to resolve any fraudulent charges that occur on your account. However, when using a credit card, you’re not short on the cash. When the bank is notified, they will typically hold off on holding you responsible for the charges. This relief will give you grace while the bank investigates the fraud.
Building Credit
If you haven’t had big purchases like a house or a car in your name (or even if you have), using credit cards is a great way to begin, or continue, building your credit. As you continue to use your card to make purchases and pay your balance on time, this will continue to increase your score. When it comes to making that big purchase, you’ll appreciate it.
Pro Tip: If your credit is average or above, call your credit card company every ~6 months to ask to raise your credit limit. One of the criteria used in your credit score is called credit utilization. Credit utilization is the amount of credit you’re using vs. the amount available. A higher credit limit equals a better credit score.
Points
Have you had that wedding invitation you didn’t quite expect? Need a date night away from the house? These are situations where you have an unexpected $250-500 that can take a quick hit to the bank account. Points are a great way to avoid those unexpected charges but still have a great experience wherever that may be. The Points Guy has a great breakdown for beginners along with some recommendations on types of cards.
Conclusion
If you have zero impulse control, then using credit cards may not be the best bet. If you feel like you can use a credit card responsibly, there’s hardly a reason to not have one or two in your arsenal. The perks give you extra support in many ways as a foundation in your financial life.
