Credit Card Benefits


Credit cards get a bum rap sometimes.

Yes, they can charge high interest and have exorbitant fees, but if you pay your balance every month and on time you aren’t affected.  For a vast number of people, cards cards are a great tool which comes with some nice benefits.

Here are some benefits of using a credit card:

Convenient Payment

This is the big one, isn’t it?

A credit card allows you to pay on the spot without having to carry cash.  Let’s face it, if you are making a big purchase you don’t want to carry cash around.  Even if you have a small purchase a credit card can be helpful.  And in today’s age of online shopping a credit card is almost a must-have.

A credit card basically gives you a loan on the spot to cover the cost of your purchase.  As long as you pay your balance in full then there are no fees.  Awesome convenience!

Build Credit History

Using a credit card properly can go a long ways to building up your credit history which in turn will build up your credit score.  Think about it – by using your credit card you may be making future purchases cheaper!

The better your credit score the lower the interest you will be charged on loans such as a car purchase or a home mortgage.

Track Your Spending

credit card benefits

Credit cards, when used wisely, carry a lot of benefits.

It would be wonderful if we all would write down all of our cash purchases to keep track of our spending habits.  But the reality is we don’t.

When you use a credit card you can track your spending on your monthly payments.  Some companies will even give you a list of your purchases for the year, or some time period, and break it out by category or retailer.  I recently checked my history on my American Express Blue Card and was amazed at how my spending broke out (we spent a lot at BJ’s Wholesale last year, for instance).

Come tax time, having a record of expenses purchases is a great help in putting tax records together!

Easy To Pay Off

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Paying off a credit card is easy.

All you need is to set up a bank account to transfer funds from (we transfer from out ING Direct savings).  You don’t even have to wait for your monthly bill.  Back in the day you had to write out a check usually.

If you have a credit card where you have your checking you might even be able to pay at an ATM or with an easy account transfer.

Just make sure you don’t charge more than you can afford each month!

0% Interest Rate Offers

If you keep an eye out you can find 0% interest credit cards.

Why open another credit card?

Credit card arbitrage!  You can take advantage of the 0% and earn money.

Say you open a 0% interest credit card, when you make purchases pay the minimum when the bill is due.  Take the balance of the payment and put it into a high yield savings account.  You get to earn interest on what would otherwise be spent money.  Just make sure to pay your credit card bills on time, and pay the entire balance before the 0% interest rate ends, otherwise you pay interest on the entire balance you had.

We used a 0% credit card for our wedding costs, earned money on the purchase balance, and cashed in our…

Rewards Points or Cash Back

Many credit cards offer either rewards points or cash back (or both).

Not that you should go out of your way to use your credit card, but having the benefit of rewards points or cash back is a nice bonus.

We’ve used rewards points to get a number of gift certificates for different retailers.  Our example about credit card arbitrage?  Besides earning money on the 0% interest rate, we also were able to cash in points to help pay for new furniture!

The Best Travel Rewards Credit Cards

Airline Miles

For some, rewards points aren’t important.  What they want are airline miles!

Every purchase helps build points towards airline miles which can be cashed in for plane tickets.  This can be very beneficial for those who love to travel and use their credit card wisely!

The Best Airline Miles Credit Cards

Extended Warranties

Nowadays, many cards are offering extended warranties on items you buy with their credit card.  This can be a great benefit on items like electronics.  Make sure you read the details to see what exactly is covered.

Car Rental Insurance

Another nice benefit is car rental insurance for cars rented using a company’s credit card.  Not all cards offer this, and you need to know the details of the coverage, but this can be nice to have when you travel and rent a car.

Exclusive Deals

Credit card companies frequently have exclusive programs that are available only to people who carry their card.

Sometimes this could be extreme discounts on certain products.  We’ve gotten tickets to concerts we would not have otherwise been able to get if it weren’t for our credit card (Prince comes to mind).  We’ve also gotten a free magazine subscription or two as well.

Keep an eye out for extras your card may offer (may sure you know the fine print as well).

Price Protection

Some cards will give you the difference in price of a purchase if you find the product you bought cheaper within a certain period, like 30 or 60 days.  Imagine its near the holidays and you buy a gift.  Two weeks later there’s a crazy sale and it’s half off!  You want to kick yourself for not waiting, but if you have price protection you just might get the difference back.

Concierge Service

Some of the more prestigious cards (read: higher fees) offer concierge services with their credit card.  This could be an extremely helpful service if used well.  Just make sure the concierge service justifies the probable fee for the card!

Look, I know credit cards can be killer for a LOT of people. But credit cards are not always evil and sometimes the blame of credit card debt falls more on the consumer than the credit card company.

For a lot of people, who use their credit cards responsibly, there are a ton of benefits that are both helpful and really cool!

What other credit card benefits can you think of?

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Published or updated April 13, 2013.

Comments

  1. Too many people get on their high horses and demand the elimination of credit cards. Like money they are just a tool for us to use to better ourselves financially or sink us like a hole in the hull of a ship.

    • I totally agree. Most of my credit card problems in the past were the result of MY spending habits, not the card company. Now I use credit cards responsibly and reap the benefits they offer.

  2. Credit cards are a great tool when used wisely. Unfortunately too many people use them unwisely and end up deep in debt.

    • Right, card companies give us the credit limit. Its up to us to us that limit within our means and not overextend ourselves.

  3. I love my American Express Blue Cash Card. It gives 5 percent back for everyday purchases and 1.5 percent for everything else (you have to spend 6000 dollars first I think). We put everything on our credit card each month, and get back about $1200 dollars every year. However, we also pay our bill every month. I think since I have had the card, they have given us about $8000, and I have never paid a dime in fees.

    My only question is, I wonder if I would buy certain things if I had to pay cash instead of just throwing it on the credit card. Would paying cash cause me more pain and make me re-think my purchase? That is the only second-thought I have about my credit card. However, I don’t really spend frivolously.

    • We have an Amex Blue card and use it all the time!

      For sure, its easy to use the little plastic card that doesn’t show an exact amount like cash does. I’ve used my cards too freely, not realizing how much I spent. But we are much more aware of our purchases now and go over our statements every month to see what could be cut out. I think we’ve gotten to where we can say we don’t spend more because of the card.

  4. MoneyObedience says:

    We have always used credit cards for many of the reasons that you list in this post. However, credit cards are a bad idea for some since they cannot connect with the amount of money they spend so easily with a quick swipe. You have to know yourself in order to determine whether and how exactly you want to use credit cards.

  5. Very good points. I find that many people (including myself) will fall into financial trouble based on their own financial (mis)management, rather than the cruelty of a bank.

    Like Money Obedience stated, each individual must evaluate himself to determine if they can/should use credit cards.

    • Knowing yourself may be one of the hardest things in life. The quicker you can take an objective look at yourself and your situation the better.

  6. Some cards also offer breakage coverage. You bring the big TV home and drop it, the warranty won’t cover it, but this will. This aded to warranty is worth about 10% of the cost of high dollar electronic purchases.

  7. We use our credit cards for everything for a few reasons listed above (convenience, cash back, and extended warranties mainly). I also like the fact that my Discover has road side service for $70 for anything from needing a tow to gas…I haven’t had to use it, but I like it’s there).

    • Roadside service for $70? That’s like getting AAA (not sure what AAA costs offhand). Interesting benefit.

  8. I only use a credit card when i am traveling because expenses are all tracked on one card. Makes a vacation easier to enjoy.

    And then, I use one for business expenses. Again, because its all tracked on one card.

    It is what you do with those cards that makes them killers. :)

  9. I’m a big fan of credit cards! When I was younger I use to carry a few hundred dollars around, but by carrying a credit card, I usually only withdrawal $100 once a month and charge the rest to my credit card.

    • A few hundred dollars? I should have hung around with you!

      I like knowing I don’t have to carry as much cash, and it also keeps me from spending as much since I don’t’ have so much cash handy.

  10. I used my credit card points to pay for our honeymoon vacation. Nothing like taking a trip on someone else’s dollar.

    We’ve also used our credit cards to invest. Cash advances are a great way to get instant capital when needed. You don’t have to apply for a loan at the bank and your credit score isn’t touched.

    Always have a plan though to pay these suckers off. Interest charges are an eroding factor of money.

    • Using credit cards to invest? You are way braver than I am! That sounds very risky. But if you can make it work for you…

  11. I use a cash rewards credit card for almost all purchases and pay it off in full each month. I get a couple hundred dollars back each year. It’s not huge, but I like it. :)

  12. Great article. I agree with mostly everything, and am not sure why some give credit cards such a bad name.

    Another minor benefit: Even if you don’t apply for 0% cards and just pay off your balance, you still get a 30-day float. Essentially, your money if still earning interest in your savings account. Although that’s not much these days, I guess every little bit helps.

  13. I use a cash rewards credit card, and get quite a bit of money back every year. You have to make sure you’re responsible if you have and use a credit card, but it can be a useful tool if used correctly.

  14. I guess it all comes down to the individual and their shopping/spending habits. I agree with ffb the key is to be responsible and being able to use credit cards correctly. You have that and you will be able to keep a credit card with no troubles at all.

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