I used to hate credit cards. Hate. Hate. HATE.
When I was paying off credit card debt right after college I hated those cards so much that I couldn’t bring myself to use them at all. I didn’t understand how anyone could say they actually liked using their credit cards… it just didn’t make sense!
Credit card debt can be one of the worst types of debt because the high interest rates make it very hard to get out. When you are paying 24% interest on your debt you have to work much harder than if you are paying 2%.
When I was paying back credit card debt I was very much in alignment with Dave Ramsey – I hated credit cards and planned to never use them again. Cancel them! Cut them up! Never again!
Obviously, after I moved past the trauma of paying off credit card debt I eventually changed my mind and saw credit cards for what they can be: a tool to help you financially when used responsibly.
Why I Love Credit Cards Now
Now that I’m free of credit card debt I love credit cards and credit cards are the main reason why I have an 800 credit score.
I’ve been using my credit cards responsibly for several years now and haven’t missed a payment or paid interest again. During that time I’ve also gotten thousands of dollars in free travel and cash back rewards. Thanks to responsible credit card use I’ve benefitted far more than I was hurt by credit cards.
The credit cards are paying me now instead of me paying them. It’s a huge lesson – if you are smart with your money you get rewarded, but if you are dumb you are penalized.
If you are smart with your money you get rewarded, but if you are dumb you get penalized.
That basically sums up credit cards in a nutshell even if there is more behind the psychology of it where credit card companies work to make you spend. If you can be responsible you will be rewarded, and if you can’t then you will be penalized.
That means you need to stick to some very important but sometimes hard too follow truths:
- If you don’t have the actual money to pay for something then don’t use a credit card.
- If you don’t trust yourself then don’t use a credit card. If you know you will overspend then don’t carry a card.
- Use your credit cards for increasing your score and other benefits, not to spend more on a lifestyle you can not afford.
Credit cards can be good. You just have to be smart.
I’m under no illusion that I’ll get rich off using credit cards. That is often the thing mocked by certain financial gurus who are anti-credit card. I know I won’t get rich from using them and there are potential downfalls, but if you use credit cards wisely then you can be rewarded in small ways and also increase your credit score too.
Reasons To Use Credit Cards
There are actually more reasons to use credit cards than to not use them. If you’ve been wondering why anyone would use a credit card over a debit card, check out all of these reasons to use credit cards:
- One time sign up bonuses (often hundreds of dollars)
- Cash back rewards for spending
- Reward points for travel for spending
- Frequent flyer miles with your favorite airline
- Safety protections from fraud
- Protection from bad or dishonest vendors
- Grace period before money leaves your bank account
- Insurance and consumer protections from the company
- Builds your credit history and raises your credit score
- Easy spending tracking with less effort
- Free credit score monitoring
There are even more rewards and benefits that cards may offer but these are some of the biggest ones that are reasons why you might want to use credit cards!
When Credit Cards Can Help You
In order to use credit cards responsibly you have to be aware of when and how you are using them. Swiping a credit card without thinking is a slippery slope that might start off ok but can end in a credit card debt disaster.
Credit cards can help you, but only when these things are true:
- When you know your credit score.
- When you use them responsibly.
- When you pay off balances at the end of each month.
- When you use credit cards for expenses you can afford.
- When you use credit cards that offer rewards.
- When you use credit cards to slowly build your credit score.
- When you use credit cards to get extra protection.
- When you don’t buy more than you can afford.
- When you save more or get a store discount.
- When you sign up for a credit card to get a killer bonus.
- When you tae advantage of special offers from credit cards.
- When you get a good balance transfer deal to save money.
- When you use credit cards to reach a goal.
- When you use them to better keep track of spending via Mint.
I might have hated credit cards in the past, but I love them now! There are lots of situations where using credit cards can be a good thing and I’ll forever advocate for wise credit card use.
If you feel like you can’t handle credit cards and always overspend, then that’s ok! Don’t use them. Don’t even tempt yourself with the possibilities of overspending. Either cut up the cards so you can’t use them or cancel them entirely. You don’t have to use credit cards and should never use them if you know it will lead you to a bad space financially or mentally.
Learn More About Credit
If you are using credit cards then you should also make sure you learn about and understand credit scores. Here are a few posts to help with that:
- Why having a good credit score matters
- What makes up a credit score
- How to improve your credit score
- How To Raise Your Credit Score With Credit Card Use
Mary is the founder of Pennies Not Perfection where she shares her journey to build wealth through online income. She quit her day job in 2021 after she paid off her debt and doubled her 9-5 salary.
Mary's favorite free financial tool is Personal Capital. She uses their free tools to track net worth and work toward to financial freedom.
Her favorite investment platform is M1 Finance, where she built a custom portfolio for free with no fees. She shares her portfolio growth and savings progress every month on YouTube.