Some people are shocked to hear that, even after paying off six figures of debt, we still use credit cards. For us, credit cards were never the problem. Our debt was law school student loans. But credit cards are so often misused, causing debt problems or making them worse, that the two are understandably inextricably associated.
Used wisely, credit cards can help you reach your financial goals. Used recklessly, they can be your financial downfall.
Credit cards definitely aren’t for everyone, but I actually love so many things about credit cards.
Before I share my top 5 reasons that I love credit cards, I want to start with a warning. If you have struggled with credit card debt in the recent past, then feel free to skip this article. None of the benefits of credit cards are worth risking your financial freedom. If you’ve had trouble with alcohol, you shouldn’t hang out with people drinking. If credit cards are your trouble, it would be wise to move on. The great things about credit cards are only great if you consistently pay your balance in full every month. If you are carrying a credit card balance, no benefits will outweigh what you are paying in fees and interest.
With that warning out of the way, here are 6 reasons I still use (and love!) credit cards even after paying off six figures of debt.
1. Convenience
There’s no doubt that swiping a card is easier than paying cash. For some, the convenience is a negative, as it allows money to be spent too easily. Credit cards are so convenient to use that it might not feel like you’re really spending your hard-earned money. Since the money doesn’t immediately leave your hands, it may be hard for some people to be disciplined in their spending.
For a busy mom, juggling kids, it’s much easier to swipe a card than dig through your purse to find exact change while holding a fussy baby. I know I don’t want to drag kids into the gas station to pay in cash.
Also, there are many places that don’t take cash at all. Just today I was at a kids sporting event where the only way to pay admission was with a card.
2. Organization
Successfully managing our finances is all about organization. Tracking our spending is a huge part of managing our money. Cash purchases can be tricky to keep track of if I don’t immediately record them.
Alternatively, with credit card purchases I can easily keep track of all my spending even if I don’t have time to record it in the moment. I don’t even have to wait until my credit card statement comes out. Immediately after swiping my card, I can see my spending on my card’s website or app. I don’t have to worry about any forgotten transactions or wonder where my money went.
3. Safety
When you lose cash, there’s no recourse. While some swear by the cash envelope method for budgeting, I would be totally stressed carrying around all of our cash for a month’s worth of spending. If it’s lost or stolen, there’s no getting it back.
Using credit cards comes with lots of built-in safety features. If your card is stolen and used, you can cancel the card and dispute any fraudulent charges. Credit card companies often catch fraud ahead of time and call to double check on suspicious purchases.
4. Rewards
Credit card rewards come in many forms. While we pay down debt, using credit card rewards to get gift cards let me buy clothes or other “splurges” so that I wouldn’t have to spend our regular money.
While there are all sorts of credit card rewards available, the most versatile is cash back. Depending on the card and spending category, you may get anywhere from 1% to 5% back on money that you were already going to spend. While $40 here and $100 there might not seem like much, it really adds up, especially if you’re putting it toward a specific goal rather than just letting it get lost in your budget.
A couple of years ago, we put all of our credit card rewards toward an upcoming family vacation. In total we pulled together $1,400 toward our trip just using cash back from our credit cards. (See all of the other creative ways we saved for our fun family trip.)
5. Sign-up Bonuses
When I was in college, credit card sign-up bonuses were lame. You would get a t-shirt, a water bottle, or candy for applying and that was about it.
Nowadays, sign-up bonuses are very competitive. We took advantage of some great sign-up bonuses a couple of years ago that we put toward an upcoming trip. For example, one card gave us $900 after signing up and meeting a certain spending requirement in the first few months. We didn’t spend any extra money, only money that we was already budgeted and would be spending anyway.
Last year I applied for and was approved for a Southwest Airlines credit card. I didn’t apply because I needed another credit card. I applied because I was super excited about the sign-up bonus which included a companion pass that last through the next February (meaning I can bring someone with me for free on every flight I take during that whole year).
The Southwest Companion pass offer seems to come up once a year. If you would like me to send you the link, please put your name and email address below (or just leave a comment) and I will send it to you. (The invitation has to be sent individually; Southwest doesn’t allow me to just publish a link here).
6. Other Perks
Credit cards often come with all sorts of extra benefits. When we bought our first DSLR camera, we used a credit card that doubled the manufacturers warranty. Some cards allow you to access VIP areas in hotels and airports. Others, include automatic insurance for lost baggage, cover roadside assistance, give you a discount on currency exchange, offer free shipping, and more.
You can enjoy some real benefits at no extra cost by choosing a card with perks that matter to you. The key is paying off your credit card in full every month so that the perks are real, instead of something you’re “paying for” with fees and interest.
Credit Cards are Useful Tools
While they aren’t great for everyone, credit cards can be really useful tools. I love the convenience, organization, and safety they provide. The rewards, sign-up bonuses, and other perks provide real value for our family.
Responsible credit card use has significant benefits! Still, all of these great benefits that I love are only worth it because we never carry a balance and never pay fees or interest. If that’s not the case for you, stay far away from credit cards.
How about you?
What is your favorite benefit of using credit cards?
What kinds of credit card rewards do you like best?
Have you ever got a new credit card because you were excited about the sign-up offer?
