The Great Credit Card Debate was launched when I challenged Ana at Debt Free Revolution to a credit card match. I love credit cards, so much so, that I have 89 accounts.  Ana hates them! Others have even noticed our opposing views, most recently highlighted by Father Sez.

Ana’s official stance is on Ways Credit Card Companies Separate You From Your Money. However, Ana couldn’t wait and got started early in Dirty Credit Card Company Tricks. I countered with reason number 1 (you won’t lose money if you lose your credit card).

Here’s 25 more reasons to love credit cards:

  1. Earn cashback and rewards. We earn between 2% -5% cashback on all our purchases on our credit card. It’s like buying everything on sale! Here’s a list of some of the best cash rewards credit cards.
  2. Make money on balance transfers. Credit card arbitrage is profitable. Credit cards frequently offer balance transfers at 0%. Leverage it by transferring this money to a high yield interest account. We’re able to make over $11,000 per year using this strategy.
  3. Rent a car. Some car rental companies will not allow a rental without a credit card. My in-laws don’t use a credit card and were turned away from a car rental company in Houston. The policy varies depending on the company, but I wouldn’t want to be standing at a rental car company unable to get a car.
  4. Make online purchases. Try asking Amazon if they take cash!
  5. Float. A great thing about using credit is just that… you are purchasing on credit and the payment isn’t due until a month later. That leaves the money in the checking account for an extra month to earn interest.
  6. Raise your credit scores. Most credit scores have a mix of business component that gives you points for holding a credit card. In addition, using it responsibly can help boost your score.
  7. Corporate reimbursements. If you have expenses for work using a credit card is the only way to go. Not only do you get to earn rewards but you don’t have to pay the bill until later, giving you time to get your expense report turned in and paid.
  8. Post bail. As I already mentioned in the roundup last week Five Cent Nickel shared with us that you can now use a credit card to post bail.
  9. Take advantage of affiliate offers. Recently American Express hosted it’s wishlist for customers and partnered with Etrade for a signup bonus (now expired).
  10. Fraud Protection. The companies call you when they see unusual spending patterns. It’s a great feature. When a charge does get through you can always do a dispute. I’ve done one a couple times at different companies. All painless processes and the charges were removed.
  11. Limits on fraud. If a charge does go through, you will never be responsible for more than $50.
  12. Convenience at gas stations. With sleeping kids in carseats it’s much easier to pay at the pump than to have to run in and pay cash.
  13. Check in quickly at the airport. We fly Northwest a lot and they have a convenient kiosk that can read your name off your credit card to speed up your check-in.
  14. Get coupons. Being a cardholder gets you on the mailing list for coupons at some stores. We get Macy’s coupons all the time which I’ve found you can sell on eBay and make even more money.
  15. Shop for others. Credit cards work well when you want to buy things on behalf of other people. I can purchase things for my mom using her credit card.
  16. Pay negative ATM fees. When out to lunch with friends, charge the bill and have them pay you in cash. Earning those reward dollars on other peoples’ money is like getting paid to go to the ATM!
  17. Try out purchases. You don’t need to front the money for items that will be returned. For example, if I need to purchase two shirts for one of my boys because I’m not sure which one will fit better, I can purchase both on credit and return one later. As long as the credit posts before the statement closing date it’s essentially a try-before-you-buy program.
  18. Deposits. I remember that many places that we worked with during our wedding wanted a deposit. With a credit card they can place a temporary charge eliminating the need to come up with money that will later be returned.
  19. Buy a car. Thinking of financing another item? Lower your interest rate using creative debt reduction strategies.
  20. Access to emergency money. Have you ever been caught when an ATM was down? If the bank is closed for a holiday or if the ACH feature is unexpectedly down at a bank (which was the case at one of our banks recently) a credit card can come in handy to make a purchase.
  21. Documentation. Credit card statements are handy little records of your purchases.
  22. Qualify for better rates and services. Our local credit union has tiers of service depending on how many qualifying services you have. A credit card counts as a service and adding it to our package qualifies us for higher interest on deposits and less fees for other services.
  23. Billpay features. Our FIA Card Services card has a great billpay program that gives you the ability to pay other cards and reoccurring bills. This enables us to simplify and organize our finances.
  24. No more cash discounts. It violates the terms of service for Mastercard and Visa, therefore there is no longer a monetary benefit to using cash that once existed.
  25. My dad got one. My dad doesn’t use a computer, doesn’t email and doesn’t believe in credit cards. I was pretty sure he would be the last person on earth to get a credit card. If he got one, then they must have something good to offer!

Of course, I’m not saying credit cards are perfect. Occasionally they make mistakes but they do get fixed. This does happen with any company though (I have many more errors on our cell phone bill but that’s another story).

Patrick at Cash Money Life debated Ana previously. Patrick had some additional points including short term loans and extended warranties. In addition, Ana challenged him to go three months without using a credit card. Whoa! I hope that isn’t in store for this debate…. credit cards are making us way to much money for me to give them up.

Action Plan

Your financial goals likely involve money: making it, saving it, investing it, and enjoying it. Credit cards can be used to help meet those goals. Why not use them?

Add your comments here and at Debt Free Revolution. If you have a blog, join the debate and let us know why you love or hate credit cards!

The Great Credit Card Debate Continues….



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Comments to 25 Reasons to Love Credit Cards

  1. And so it *officially* begins :) Let’s see here: I have done #3, 4, 10, 11, 12, 13, 18, and 23 all with my debit card. I have absolutely no plans to do #8 with either credit or debit card LOL and I actually do get “cash back rewards” with my US Bank debit card also, if I choose to shop at their affiliated stores. #24 is not an incentive in my book! As for #19…I’ll do that one with my debit card or cash when I am finally ready to replace a vehicle…probably in 2012 at the earliest. We’ll have to see if either blog is still standing then!

    Debt Free Revolution

  2. I’m definitely on Ana’s side, on this one. I’m looking forward to the debate!

    None of those reasons would ever convince me to apply for a credit card (I’m card-free right now, and haven’t used one for 2 years!) My debit card does pretty much all of those things for me.

    And post bail?? If someone has to post bail, with a credit card no less, they’ve got bigger issues than a credit card vs. debit card problem!

    green3

  3. I don’t know. Seems you have overlooked Visa debit cards- I buy everything at Amazon.com with some sort of debit card. I also have Visa debit cards from 4 different banks so I’ll never have all the cards with me at once (in case of loss or theft).

    The cash back rewards are the best incentive for using credit cards in my book, but after reading Lynnae’s story at BeingFrugal.net I have to question if the money earned is greater than the inevitable hassle that will arise any time you deal with a credit card company.

    To each his own, but that is my two cents.

    Eden

  4. I started a lengthy point-by-point response to this, as this is the craziest post I’ve ever read. But I realized it would be pointless (no pun intended), as you are convinced that this “strategy” is actually making you money.

    All I can say is you’re building a house of cards, and sooner or later they’re going to fall.

    Sheesh. 89 credit cards. You are absolutely insane, not to mention in serious denial about the precariousness of your situation. But, maybe you have a quarter-million dollars cash in the bank to cover those balances, when this game catches up with you.

    I won’t deny that there are *some* advantages to using a credit card over a debit card (although MOST of what you listed could be done with a Visa check card / debit card). But you only need ONE credit card to do that, not 89.

    Some of them are nonsensical — like #5. You’re not really floating money at all. You’re having to take money out of your account every month to pay the previous month’s credit card bills — so where’s the “float?” That doesn’t even make sense.

    I’m not sure how you could qualify for 0% interest on every one of those 89 cards, so #1 and #16 are also moot points — the cashback rewards rarely outpace the interest being charged.

    And, believe me, when you are willing to pay CASH, especially for big-ticket items, you can almost ALWAYS negotiate a better deal than if you’re whipping out plastic, which costs the vendor money. So #24 is an invalid reason to use credit cards.

    I can do billpay with my checking account, as can most people with online checking these days, so #23 is a moot point. (And, if you’re not carrying around 89 cards with payments due, you have very few bills to have to worry about paying!)

    OK, I said wasn’t going to go point-by-point, but those were some standouts, along with #8 (paying bail) — I agree with the above poster, if you’ve gotta do that, you’ve got bigger problems to worry about.

    And, with all due respect, #25 isn’t an incentive to apply for a credit card or line of credit. That’s a “keeping up with the Joneses” mentality that is sure to keep you in debt for a long, long time.

    jejily

  5. @ Debt Free Revolution: I agree that you can achieve many of the points with a debit card. My main concern with a debit card is the fraud protection. If someone compromises your account, you must fight to get your money back. With a credit card, you don’t have to pay the charge while it’s being disputed. The fraud cap on debit cards after 2 days is $500 ($50 within two days). I would hate to be out $500! With a credit card I don’t have that risk.

    Madison

  6. I love my Amex. They’ve dropped the rate for me twice and cleaned up countless fees. They’ve got my back in any disputes (am currently in one right now). They give me fraud protection, travel insurance, access to my credit reports, etc (all the latter for a fee, of course). The wishlist thing is a great idea.
    And I get Delta miles (though I’m about to change that).

    Double cycle billing I can do without. But now I pay it off every month, and no interest charged.

    My bank’s debit card – not even close to awesome. First of all, the bank itself sucks. They mess EVERYTHING up, and if I weren’t diligent about checking, I’d be SOL. Every place I’ve banked at has been terrible.

    Having worked at a bank doing fraud/compliance work, I can tell you that the fraud protection you have on your debit cards/bank accounts is not nearly as good as that on your credit cards. It’s partly a government regulation issue, and it’s partly because it’s in the credit card companies’ interest to be more accommodating.

    All that aside, I think the key thing to remember is that corporations aren’t your friends. They are out to make money however they can. Don’t expect them to be nice or friendly. If you’re going to deal with them, you have to be just as ruthless as they are.

    deepali

  7. @ green 3: Good for you! It’s very commendable that you have been card free for 2 years. I agree completely about the posting bail! I though it was so humorous when I came across it, I couldn’t help but add it to the list!

    @ Eden: Agreed, debit cards can also do many of the above. They’re sort of half-way in between using a credit card and using cash only, with the exception of the fraud protection. Lynnae’s story really does make you stop and think. I hate arguing over mistakes with companies no matter where they are. I’m definitely on her side to get it resolved!

    Madison

  8. @ jejily: There’s probably some points that I should clear up. We only actively use 2 credit cards for purchases and we pay the balance in full each month.
    The other cards are used for credit card arbitrage, so there isn’t a house of cards, as the money actually IS readily available in the bank. The entire balance is at 0%. I do not support anyone spending above their means and paying interest. We’re making just over $11,000 a year from it. A very profitable strategy not achievable with debit cards.
    I would never recommend that most people have 89 cards, and I agree that 1 card will get the majority of the benefits.

    There is a month of float available on purchases. Here’s how it works: If I buy $100 in groceries today, and my statement closes on January 15, the bill will probably be due around February 4. I can earn 5% on that $100 for an extra month in my account.

    And I agree, #25 is not a reason to get a credit card! I just had to add some funny ones to keep the debate on the lighter side. My Dad is so against credit cards, maybe even more so than Ana! But he got one, so I thought I’d give him a little credit.

    I’m all for the responsible use of credit cards. If someone doesn’t live below their means and cannot use a credit card responsibly, I do not recommend them at all. My thoughts are based on using a credit card to purchase items that you already have the money for and will pay off in full each month.

    Glad to see you so passionate about it!

    Madison

  9. @jejily
    Actually, if you’re stoozing correctly (as I believe Madison is) then you should have $250k in the bank to pay off your credit card balances, and think of the interest you can make on $250k – approx $10k per year before tax. It’s not a strategy for me at the moment, but…

    plonkee

  10. Where do you get the $500 figure for debit card fraud? All I can find, according to Visa, is that Visa debit cards are protected with zero liability, just like credit cards.

    Eden

  11. @ Eden: Here’s a good summary: http://www.kiplinger.com/colum.....010808.htm

    Some banks do offer a voluntary coverage that is better than the government regulation. You need to check your specific debit card to be sure.

    Visa protects their debit cards only if you do NOT use your pin.

    Madison

  12. Thanks Madison. I think that info may be out of date though. According to Visa’s site they offer complete protection and make no mention of the $500 limit (perhaps it is hidden). :)

    Either way, not really a big deal, just curious.

    Eden

  13. @Eden: Now I’m curious too… do any other readers know if the $500 rule still exists?

    Madison

  14. Well, not to promote my own site, but I did write up a little post on it. I got that info from visa.com, but like I said, it wouldn’t surprise me if there is more hidden somewhere. I have not gone through something like that myself (I had a fraudulent transaction happen to me for about $200 which was no big deal) so who can say for sure.

    I do think it is in Visa’s best interest to offer that protection to debit card users as well, so it would not surprise me if they have improved debit card protection.

    Eden

  15. Great pointers! I love using my rewards cards as well, and I think they are worth using — for my situation. I have no problems with people not using them for what ever reason they choose. (but I do think it extremely important to have access to established credit and have at least one card available for financial emergencies!)

    Patrick

  16. I get zero offers all the time but can you tell me of some companies that do not charge a transaction fee in the mice print. (usually 3% called a transaction fee) denoted like this: 0% balance transfer fee*

    * means 3% transaction fee for balance transfers or balance transfers.
    Please advise.

    P.S. I think the $500.00 rule is up to the individual bank. Most of the larger ones don’t have anymore than $50.00 but it can always be found in the credit card agreement information that most people just throw away!

    Clarkfan2

  17. I can do these things with my debit card: 1, 3, 4, 9, 10, 11, 12, 13, 17, 20, 22, 23
    Things I don’t need and don’t care about: 2, 5, 6, 7, 8, 9, 10, 11, 12, 13, 17, 20, 22, 23
    24 is not true – I flash the cash and get serious discounts all the time. I shut up and let Benjamin do the talking.
    25 I don’t care what your dad does. That may be a reason to you but it isn’t to anyone else.

    I used to work for a bail bondsman/bounty hunter and I can tell you, most criminals would rather call their momma and put her house at risk than pay themselves. Now they’re going to put their bail on her credit card. Big whoop! Momma’s still getting screwed over by her chile.

    I travel including internationally, I rent cars, I shop online, I use a debit card and CASH, I get purchase protection, fraud protection, rewards points, etc. There is NOTHING that a credit card offers that I want/need or don’t already have in my dc/ca system.

    Whenever I tried to invoke purchase protection and chargeback rights when a merchant screwed me over, my CC company screwed me over again. They will do anything not to pay you back. I keep the paperwork from that nightmare to remind me of the truth behind those slick lies.

    I have never had any fraud or theft or mistakes on my bank account with debit card. I like solving problems F2F with my former students who feel a sense of gratitude towards me. I always get my way with the local bank.

    I don’t need float because I have a big ol’ pile of cash and am never in a pinch.

    I don’t need moneymaking schemes because I am paid well and already have sideline jobs that pay and are actually things I enjoy doing more than monitoring 89 freakin’ credit cards. Yikes. Not my idea of fun.

    89 credit cards! I check my accounts daily over breakfast to reconcile and guard against errors or fraud; I don’t have enough time in the morning to check 89 credit card accounts! I don’t even want to think of what it’s like to check your annual credit report. Have fun with that!

    That CC arbitrage “dream scheme” is one hiccup away from becoming a nightmare. (Universal Default)

    Question: how many in the Forbes 400 got there through CC arbitrage?

    kentuckyliz

  18. @ Clarkfan2:
    I’ll do some digging and put together a post of the cards I find without a balance transfer fee. The ones I used recently were the American Express in Chicago card and various Citi cards.

    Madison

  19. @ kentucky liz:
    Glad to hear you have found a system that works for you. As for the Forbes list, I’m doubting that anybody is on the list through credit card arbitrage. However, it can be a lucrative strategy to assist in meeting financial goals, but isn’t for everybody.

    Madison

  20. “I don’t need float because I have a big ol’ pile of cash and am never in a pinch.”
    Using float is not about being in a pinch. It is about getting extra interest during the month between the purchase and the due date. Not much, but it is free money and it adds up. In terms of available cash – why do you assume those of us who use credit cards have less of it than you do? I have paid off home, no debt and savings too. But why say no to free money?

    About fraud protection of debit cards. Even if I assume that some debit cards provide the same level of protection, there is one major difference. The moment someone charges your debit card, the full amount is taken off your checking. Sure you can get it back after you complaint and the bank investigates, but in the meantime you are out of money. In fact, until you get your monthly statement you don’t know about it and continue to sign check blithfully unaware that your balance is less than you think. Large enough amount of fraud and some of your checks may start bouncing. Not nice. With a credit card, even if you sign up for the automatic payment in full as I do, you get the bill and notice the problem long before the money leave your account.

    In terms of universal default, there is a simple solution – pay your bills on time, setup for automatic payment when possible, monitor your statements. If you do arbitrage and notice that your statement shows interest, take off money from your savings and send one big check. Personally I don’t do arbitrage, but that what I’d do.

    Some places give discounts for cash; others don’t. Sure, when someone gives me a discount, I pay cash. If not – I’d rather get cashback. Also, AmEx doubles manufacturer warranty. In some cases it may be useful.

    kitty

  21. I am amazed at how much you can make doing credit card arbitrage. Kudos to you for pulling it off (I am just not motivated or disciplined enough to monitor that many accounts and am a little worried about the hit to my credit score, since I plan on relocating soon and will need to buy a new home). Don’t let the detracters get you – from their posts, it is pretty clear to me that they do not get it. I use credit cards as much as I can, take advantage of the float and pay the balance off in full each month, and get a nice cash rebate for my troubles. Has worked well for me. I view it as getting paid for being disciplined.

    troya71

  22. @ Kitty: You said it better than I could have!

    @ Troya 71: I agree, I think the arbitrage is a concept that you either get or you don’t get. Great idea to not screw around with your credit before possibly buying a new house. If there was a chance we would be moving… I wouldn’t be doing what I am doing (to the same degree at least!)

    Madison


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