Credit cards are great!

Credit cards don’t put people in debt, people put people in debt. Credit cards have a negative stigma around them due to their high interest rates and the horror stories from individuals in huge debt. As a result, many people are afraid to take out credit cards. In this article I want to dispel those myths and explain some of the great benefits you of owning a credit card.

What are the benefits of having a credit card?

Benefit #1: Credit Cards will help you build credit.

Good credit isn’t something we think of until we need it. It’s not as if we go through life thinking about what our credit score is. For that reason we tend to ignore this first benefit of credit cards. Having a good credit score can save you tens of thousands of dollars in the future.

How does you credit score affect interest rates?

The better your credit score, the lower an interest rate you pay on loans. For example, let’s say you borrow $200,000 to purchase a home on a 30-year fixed loan. According to, if you have a credit score of 650 (which is considered a “fair” score), you will pay and annual percentage rate (APR) of 5.085%. However, if you have a score of 700 (which is considered a “good” score) you will pay an APR of 4.624%. What difference does this make over a 30 year period? If you have a “fair” score, you will pay $190,260 in interest over the life of the loan. If you have a “good” score, you $154,787 in interest over the life of the loan. This is a savings of $35,473! Try it out yourself! Go to and play around with some numbers and see what you discover.

Benefit #2: Credit card companies have strength, and will help you when you need it.

Another great benefit is that credit card companies are on your side when you make purchases. If you buy a product that you are not satisfied with, and the company you bought the product from is giving you a hard time, the credit card company can help save you the headache of trying to get your money back. If a company won’t refund your money, chances are the credit card company will. This is called a chargeback. The threat of chargeback will give the company you purchased from an incentive to provide good customer service and timely refunds if appropriate.

Benefit #3: Extended Warranties

Many credit cards will extend your warranty up to a year for purchases you make with your credit card. This can come in handy, especially for large electronic purchases. There is no need to buy the extended warranty if you make you purchase with a credit card!

Benefit #4: Customer Rewards

Many cards will pay you nice rewards in the form of travel miles or cash back bonuses. For example, American Express offers 6% cash back on groceries and 3% back on gas if you get their Blue Cash Preferred Card, which costs $75 a year. Chase offers 5% cash back on a rotating list of categories and 1% cash back on all other purchases with their Chase Freedom Card. There are a number of other cards which offer great rewards and travel miles, which I won’t go into too much detail here.

Credit cards have a number of benefits to consumers as stated above. If you are a reliable and responsible with your debt, a credit card could be one of the best investments you make.

What do you think of the benefits to owning a credit card? Do you own any credit cards? Why or why not?


11 thoughts on “Credit cards are great!

  1. Even if you don’t ever want to have to apply for a loan, building credit by having a credit card and paying it off each month makes it so you have that credit history if the day comes that you do need a loan.

  2. I agree with your statement that credit cards do not put people in to debt . I have been using credit cards for last 20 years without ever once paying interest or late payment charges . If we use deligently , this instrument of great value of convenience , emergency needs and rewards apart from free credit period . Only if we think that we can cheat ourselves or others using this instrument , it can do a great harm to all concerned

    • I understand. It’ll be a different situation for everyone. If you are able to overcome those temptations to buy things with a credit card, the benefits could be great. But if that doesn’t work for you, you are better off getting rid of the credit cards for good. Those interest rates will quickly put you in a hole that can be very difficult to get out of.

  3. My first thought was after reading the first sentence was this quote:

    Guns don’t kill people. Bullets kill people. (Well, unless you hit them really hard with the gun or something, but I think, considering how often that happens, and how easy the alternative is, it’s safe to generalize that it’s really the bullets.) So, we should outlaw bullets. Guns are fine. Then again, it isn’t really the _bullets_ themselves, is it? It’s the kinetic energy from them that drives them through… we should make kinetic energy illegal. Hmm, but kinetic energy is based on the laws of physics…

    Save Lives! Outlaw Physics!

    Tozetre, Avatar the Penguin

    Then, I noticed that you didn’t put in the obligatory PSA of ALWAYS PAY YOUR CREDIT CARD IN FULL. EVERY. MONTH.

    If you are currently not doing that, then this article probably doesn’t apply to you until you have finished paying off that debt. Perhaps switching to cash until you work a bit on your spending habits.

    I didn’t know about the extended warranties. I think sometimes they also do car insurance for car rentals – but you’d have to read the pamphlets they send you when you open your account.

    • I have also read about car insurance for car rentals. There are a number of great benefits that vary, depending card/company you choose to do business with. Thank you for the comment!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s