Scott Bilker is the author of the best-selling book “Credit Card and Debt Management.” He is also the Editor and publisher of the FREE DebtSmart� E-mail Newsletter (http://www.debtsmart.com). Sign up today!
Call me an extremist. A few issues ago I wrote to you with “10 Reasons You Should Hate Your Credit Card Bank”. In this issue I will point out the other side. Boy, the banks are going to love me for this; too bad they won’t be sending me a check!
Love ’em, hate ’em, it’s the same old story. Credit cards themselves are not bad. There are advantages and disadvantages. This time I want to take a look at some of those advantages…
By the way, please take the survey when you’re finished–thanks!
1. Access to money By being able to use your credit card you can actually save money! Here’s an example from my personal life. My dentist gives a 5% discount if you pay at the time of service. Because I can pay with my credit card I get the 5%. Even if I paid interest on this amount, at 10% APR I can still take 6 months to pay it back and break even!
2. Protection from merchants When you buy stuff with your credit card you are very protected. For example, if a merchant won’t give you a refund for a return you can always contact your credit card bank and dispute the charge. The bank will probably decide in your favor and chargeback the merchant. The merchant would have to take you to court to fight further. On the other hand, if you paid cash instead of using your credit you would have to pursue the matter in court with the merchant.
3. A chance to build a positive credit history. You must have a good credit history in today’s society. Many people look at your credit report to judge you so it’s vital that your report is the best it can be! Potential employers, insurance companies, mortgage companies, and many more will try to get an idea of your character from looking at this information. Having a credit card and using it wisely will help create that positive history.
4. Other perks and cash back rewards There are many cards that actually pay you to use them. They provide a cash-back bonus or other reward. If you can take advantage of that reward then you can actually save money.
5. Warranty protection Some credit cards will extend the warranty of an item purchased with that card. Contact your credit card companies to learn about these benefits so you know which card to use when purchasing that new computer.
6. Money in an emergency If your car breaks down late at night you may not be able to get an ATM machine or your personal bank. However, by having a credit card you’ll have access to the money you’ll need in these tense situations.
7. Better deals than other loans So many banks, so few good customers. They are fighting for our business! You may be able to get better rates from your credit card bank than from a personal loan or auto loan. Right now I have four, count ’em, four banks that are offering me 0% until near the end of this year!
8. No chance of losing cash If you lose your wallet you’ve lost your cash. If you have $100 in there, it’s gone. If you carry little cash and use credit, then, if you ever lose it you can call the credit card bank and report the card lost and you won’t owe a dime. The bank loses the money, not you, HA HA!
9. Better than a debit card If someone steals your debit card information they may be able to steal money from your accounts. If that happens, your checks will bounce and you’ll have to deal with each place you wrote a check too plus the bouncing fees from your bank. You’ll have to fight to get your money back. If someone steals your credit card then you would call the credit card bank and tell them cancel the account and you wouldn’t be responsible for the charges that you didn’t make. That’s the risk banks take for the profit they make. Hey, that rhymes.
10. Customer service 24/7 Most credit card banks have reps there 24/7. That’s great because you can deal with them at your convenience. If you pay your bill late Thursday night, and you have a question, you can talk to someone. Granted that you’ll be dealing with their voice menu for a while before you speak to a human, but you will eventually speak to one. 🙂