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8 Reasons You Should Use a Credit Card Over a Debit Card or Cash

Updated: Feb 20, 2021

The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article does not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.

Should you use a credit card? What are the benefits of using them? But Dave Ramsey tells everyone to not use them. Should I listen to him? These are the top 8 reasons why credit cards can bring a little more happiness to your wallet and your financial life.

1. One-Time Bonuses

The first reason why credit cards are awesome is because many of them offer one-time bonuses, meaning you literally get money for signing up and making a couple of purchases with your card. There are credit cards like the Chase Freedom Flex or the Bank of America Cash Rewards Card where they literally give you $200 if you spend at least $500 in the first three months. So if you know you’re going to spend at least $500 on Amazon and Uber Eats in the next three months, or even buy an expensive item, like a new phone, why not get one of these cards? It’s literally $200 of free money! Do you like free money? Because we do.

2. Cash Back

The second reason why credit cards are awesome is because you get cash back. Credit cards like the Chase Freedom card give you 5% off rotating categories. That means that sometimes you’ll get 5% off shopping on Amazon, or buying groceries, or getting gas. If you’re going to buy bananas, potato chips, and dog food every month anyway, why not use a credit card to save some money while you’re at it? You can also stack these savings with multiple rotating category credit cards so that you can get 5% in the categories you like each quarter.

3. Reward Points

Reward points credit cards are set up to allow you to earn one or sometimes even more points per dollar in spending. So for every one dollar you spend, you could get 1, 2, or even 3 points. And with the more points you build, you can trade it in for travel, gift cards from retailers and restaurants, or for merchandise items through the credit card company's online rewards portal. Whenever you go on vacation, it’s usually free or close to it because you accumulate a lot of points each year, which basically pays for my trip.

4. Security

When you use your credit card, it makes it easier to avoid losses from fraud on your purchases. When a thief uses your debit card, the money in your bank disappears instantly. When your credit card is used fraudulently, many times the credit card company will detect the suspicious activity and prevent the card from being used. Even if it is used, you can easily call your credit card company and they will most often not charge you anything and resolve the matter for you. It’s kinda like having a bodyguard for your credit card. Pretty cool huh?

5. Grace Period

The fifth reason why credit cards are awesome is because you have a grace period. When you use your debit card, your money is gone right away from your checking account. However, if you use a credit card, your money still stays in your checking account and you don’t have to pay until later. It’s kinda like an I-owe-you to the bank. Now credit card users beware! If you are going to purchase something with a credit card, it is best to pay back what you used in full. For example, if you spent $500 on your credit card, you better pay back $500. If you don’t, you will get charged interest fees. And if you remember correctly, we want to use credit cards to gain money, not lose money.

6. Insurance

The sixth reason why credit cards are awesome is because most credit cards offer insurance. This is, by far, one of the top perks that many credit card owners don’t know about. Did you know that if you buy a phone with a credit card and your phone breaks, there are many cards that can cover the damages and give you an extended warranty? Even when you rent a car and use your credit card, your card can insure you up to a certain amount.

7. Universally Accepted

The seventh reason why credit cards are awesome is because they are universally accepted. When you want to rent a card or a hotel room, you'll pretty much have an easier time if you have a credit card.It’s usually easier for these companies to charge customers for any damage you cause to their car or room. Another reason is that these companies sometimes don’t know the final amount of your transaction and therefore need to reserve a certain amount of your available credit line in order to protect themselves from potential charges they didn't anticipate. Also, when you're traveling in a foreign country, many merchants won't always accept your debit card, even when it has a major bank logo on it.

8. Build your Credit

And for the final and more important reason why credit cards are awesome, they help build your credit score. If you can show that you can pay your bills on time on a consistent basis, you’ll be able to increase your credit score, which makes it easier to get a loan and purchase larger items, like a car or a house, in the future. Can you do this with debit cards? I don’t think so.

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