As I’ve mentioned in the past, I think credit cards are a good way to help manage your money. In fact, I applied for a student Visa card the very week I turned 18. Credit cards have numerous benefits, which I feel outweigh any possible disadvantages, so I thought it’d be useful to detail those positive attributes.
Ease of tracking – A big part of personal finance is knowing where your money is being spent. Credit cards allow you track your spending effortlessly. Simply connect the card to Mint or Quicken and your transactions will automatically be downloaded. Or, just head on over to your credit card’s website to see what goods and servies you’ve purchased.
Security – All major credit cards come with “Zero Liability” polices. This means that you won’t have to pay a single cent if your card is ever stolen. Most debit cards come with this protection too, but there’s a catch: while the bank is figuring out what happened, your money is GONE. You might have to wait weeks for the bank to replace your money. With a credit card, none of your money has gone anywhere.
Rewards – A ton of cards will actually pay you to use them. There’a multitude of options provided: cash back, airline miles, or points. Receiving 1% to 5% cash back or accumulating points won’t make you rich, but there’s no harm is getting a slight discount for things you were going to buy anyway.
Time savings – Swiping a card takes less time than writing a check. Plus, there’s no change that has to be counted and given back to you like there is with cash. Standing behind someone writing a check drives me insane these days. Especially the people who sign their name with the same concentration and effort they would use to sign the Declaration of Independence.
Purchase protection – The main credit card companies offer a ton of protection on almost anything you buy. MasterCard will double the standard warranty that comes with a product. Visa will reimburse you up to $500 dollars if something you buy is damaged or stolen. American Express has you covered for up to $1,000 dollars.
These are all great benefits that you won’t receive with cash or a check. So once Citi Bank approves my application (they actually sent me a letter asking for a copy of my tax return, probably due to the new CARD Act), I’ll be using my Visa for just about every purchase.
