Cash is king . . . or is it? If you grew up hearing your parents extol the virtues of “cash on the barrel,” it’s time to reconsider. Here are some reasons why it pays to love your credit cards and go with plastic.
Cash is messy.
Cold, hard cash is a slippery thing. Coins vanish into plush chairs. Twenty dollar bills tumble onto city sidewalks unnoticed or disappear when absentmindedly placed in the dryer. Going out of your way to restock your cash supply at an ATM is an irritating waste of time. At the same time, it’s nerve-wracking to stash wads of bills in your home or stuff them in your pockets when you’re on the go.
A credit card is handy and compact. You don’t have to refill it while standing in the rain outside of a bank. Plus, if you lose it, you can cancel the lost card and quickly order a replacement.
It makes tracking your spending so much easier.
Have you ever started out the week with a trip to the ATM only to end it by peering into your empty wallet and wondering where your cash has gone? Your credit card company takes the mystery out of the past by keeping a record of every purchase you make.
Log onto your cardholder’s website and see how much money you spent where – whether it was last year or last night. Many sites even allow you to run reports if you want to see how often you spend at certain retailers or how much you’ve dropped on electronics this month.
You can also download your credit card statements directly into financial tracking software, sites, or apps. If you have multiple cards that you use for your expenses, you can tap into the power of these programs to get an overview of how you’re spending with your credit cards.
You’ve gotta love the perks.
Credit cards these days are loaded with goodies. By using your card, you can rack up cash back, airline miles, points toward gift cards, discounts at your favorite store . . . you name it. It all depends on the rewards card you choose to make yours. You can even nab a sign-up bonus by getting a new card.
Plus, there are other handy benefits your card may offer – purchase protection, extended warranties, rental car insurance, invitations to special events, and discounts with a host of merchants. Some cards even offer you a peek at your credit score. Speaking of which . . .
You build your credit history.
Want a mortgage, car loan, or just the time of day from a bank? It helps to have a passable credit history. If you’re consistently responsible with your credit card bills, you may be able to work your way toward an excellent credit score. (That’s when the banks start asking you for the time of day.)
Of course, in order to make that happen, you have to have the discipline (and money in the bank) to pay your credit card bill on time every month. Automate your credit card payments or have your cardholder send you reminders so you don’t get behind.
Credit card companies are interested in keeping their good customers, so try giving them a call if you slip up. They’ll probably reverse a one-time late fee if your bill fell through the cracks or see about lowering your interest rate if you ask.
It takes the fear out of online purchases.
Yes, you can make an online purchase by typing in your debit card information. But don’t you feel unnerved about giving away info that links directly to an account with your life savings? You can definitely sign up with a service like PayPal, which keeps your account information secure when you make your online purchases. But you can also use a credit card.
Unlike a debit card, there’s no cash attached to your credit card that a would-be thief can steal with your card information. Plus, if someone uses that info to make an unauthorized purchase, you can contest it with your card company and not pay that part of your bill.
Your cash is safe.
You can earn more (sometimes a lot more) interest from your cash.
The timing of the credit card billing cycle actually gives you some time to earn extra interest on your money.
Let’s say you buy a new couch set today and pay with cash. Poof! That cash is gone today.
Now suppose you’ve used a credit card instead. Depending on when your billing statement ends, it could be nearly two months before your credit card bill for the couches is due. Even if you pay off that bill in full, that’s two months of interest you’ve earned on the money in your savings account that eventually covers the couch bill.
In some cases, it pays to go a step further. Suppose your couch supplier is offering you a special deal – if you open a credit card with the store, you’ll be able to distribute the payments for your furniture across three years with no interest charges (provided you make your payments on time). Now you have three whole years to rack up interest on money that is slowly being used to pay for your couches. If you have that money in a high-yield savings account or a good investment, you could accumulate some serious extra cash.
Just by using your credit card.