Are Credit Cards Really That Bad?

Maybe you’ve maxed out your cards before. Maybe you were told to cut up all your cards.

You’re sticking to a budget. Maybe you’re tying to get your finances in order. You want to contribute to retirement or just stop living paycheck to paycheck.

Whatever the reason, you’ve identified that credit cards are a problem in your life. These companies give you the ability to spend when you don’t have the cash currently available. You’ve learned that it’s extremely easy to spend when you don’t have money and credit cards are the devil.

Well, they don’t have to be.

You need discipline. You need to be able to charge only what you know you are able to pay off every month. This is the key. You can avoid interest rates altogether and take advantage of the benefits.

In our household, we don’t use debit cards. We use cash every now and then. Credit cards are used for nearly everything. We know what we can spend weekly on the cards in food, gas, going out to eat, etc…

We seem to forget that these credit card companies work for us.

There are certain things that credit cards give us that cash just can’t. Let’s deep dive into each one of these.

Rewards

The biggest one for me is rewards. I’ll use my Discover card as an example.

My Discover has an unlimited amount of 1% rewards given. I can spend anywhere on anything and get 1% back.

Even better than this, they have rolling rewards for certain places like restaurants, Amazon, gas stations, etc… that give you 5% cash back. The offer changes every three months.

The Amazon reward timing usually falls late in the year which allows me to spend money that I was going to spend anyway at Amazon on Christmas and rack up 5% cash back.

Let’s say I spend $1,000 on Christmas presents from Amazon this year (totally doable). I’m going to receive 5% or $50 in cash back rewards. (Note that the 5% cashback caps at $75 per quarter.) I spend $2,000 on miscellaneous items that aren’t Amazon, but Discover still gives me 1% back on those purchases. That’s an extra $10.

So I made $60 spending just like I would be spending.

Credit Score

I like that the credit cards I use update me on my credit score.

I can see when new inquiries are made and if my email address has been compromised. Capital One gives me little tips on how they think I could increase my score.

Capital One also has a Credit Simulator which shows how certain changes I make would impact my score over time.

It also lists important things like:

• On-Time Payment Percentage
• Oldest Credit Line
• Credit Used
• Recent Inquiries
• New Accounts
• Available Credit

Next to each of these, it’ll tell me if I’m below average, average, good, or excellent. It’s very user friendly.

The Capital One app allows me to check my TransUnion Credit Report. I can check the report for signs of theft, fraud, or error.

I can update the score every 7 days, which I actually look forward to because I’m a nerd.

Check out my article on upping your credit score if you want to keep talking credit scores.

Monthly Subscription Fees

I’m guilty – I have a couple of these and I’ll be transparent on what I have.

I have Sirius Satellite Radio which is currently charging me $11.98 per month because I call every six months and complain when the cost goes up.

I also have an ATC Fitness $15.00 a month gym membership fee. No, I don’t work out. This is for my daughter.

Capital One magically knows that these are recurring fees and they’ll let me know when that charge is about to hit my card.

Companies like gyms make a ton of money off of people that never cancel. They keep the charges either because they forget about them, it’s too much trouble to cancel, or they think they will eventually start using the service again. Whatever the reason, Capital One provides a reminder that you are being charged this amount each month.

Even better, next to the recurring charge, they offer a “Cancel Service” button and they’ll stop allowing these charges on your behalf.

Cash vs Card

My purse is a hot mess. I can tell you right now I have multiple loose $1, $5, maybe $20 bills hanging out and floating around.

If I lose cash, it’s gone. It’s extremely likely that I have lost cash before and not even realized it. I can say I’ve found $20 in jacket pockets before and I have no idea where it came from.

A couple years ago I was at Target and I asked for cash back by using my debit card at the self-checkout register. I forgot to grab the cash. I went back into the store after I had already put everything in my trunk as I just then remembered that I hadn’t grabbed it.

When I went back to the register, the cash was gone. Completely my fault and I had no one else to blame.

With credit cards, if I drop that on the ground and someone picks it up, I don’t lose anything. I can cancel right from the app and they’ll ship me a new one in no time.

I have a company AMEX card. Once someone tried to use it at 7-11 and somehow AMEX knew it wasn’t me. They sent a message directly to me and let me know they declined the transaction. They asked if I’d like to cancel the card or if it was me that was attempting to make the purchase. I confirmed it wasn’t, they cancelled the card, and I had a new one in three days with no loss to me.

Disputes

Let’s say you bought something online that arrived damaged. For whatever reason, this seller is extremely hard to deal with and will not accept the return, give you your money back, or send a replacement.

Let it go and never buy from them again?

Well, I would definitely never buy from them again, but don’t let it go.

Luckily, you paid with your credit card! It’s SO easy to open a dispute. You’ll send all your information to your credit card company and they will fight it on your behalf. Most disputes are resolved within 60 days.

Also, while logging into my Discover account, I find I can easy click the “Don’t Recognize This Transaction?” for any purchases I believe are fraudulent.

Checking up on Your Spending

If you’ve got cash flying out here and there, spending some on your debit card, spending some on credit cards, I can relate. It’s easy to throw your budget out the window and spend carelessly.

I have constant receipts floating around. When I’m asked at a gas station or store if I want a receipt, I immediately say no. These small, annoying pieces of paper are difficult to keep up with.

If you’re spending only on one or two credit cards, you can easily see where you are in your monthly budget and what you have left to spend. No longer do you have to save receipts or look in multiple places to find out what you are spending and where.

Final Thoughts

These are all my honest opinions.

I use credit cards regularly and I love seeing rewards build up. I also feel safer using a card instead of cash or my debit card.

Know that you can rack up some cash by referring your friends/family. For example, Discover offers $100 referral bonus for you and your friend after your friend uses your link, opens an account, and makes a purchase within three months. Check out Discover Referral Program or use my link for the $100.