7 Smart Ways To Use Credit Cards

There’s a lot of people out there who shy away from credit cards, and for good reason.

I’m sure you’ve heard plenty of horror stories about outrageous fees, insane interest rates, and crippling debt that all come with the use of plastic for your purchases. With all the bad media attention credit cards have gotten over the years, and recent laws unmasking the shadowy underbelly of the banking industry, it harder than ever to like the damn things.

But to throw them out completely is a mistake. A big mistake. Because with the right tactics, credit cards can be powerful tools in your financial life.

1. You get an “out” with credit cards.

If you ever decide to buy something and get charged more than you expected, you can always dispute the charge. This can be a great help, considering you’re using the “pull” of your big strong credit card company to resolve any disputes with merchants. In most cases, they’re on your side.

Although being able to dispute a credit charge isn’t the greatest customer protection available, it offers a lot better protection on stuff you usually buy with cash or your debit card. After all, while the issue is in dispute, it’s not YOUR actual money that’s getting tied up in the meantime.

2. Credit cards allow you to instantly meet an emergency.

One of the greatest benefits credit cards provide is that they’re actually pre-approved loans, instant money in case any emergency situation should present itself. When it comes to the subject of easy cash, it’s always a catch-22. However, the thought of being able to get your hands on some cash during an emergency can be critical. Even in the event that your rates are ridiculously high, in a real emergency, when your wallet is cornered by debt, and you have no friends or family to turn to, plastic can provide your wallet and bank account with comfort.

3. Forget paying for up to 2 months when using a credit card.

The big difference between credit and debit is as soon as you swipe the debit card, the money is taken from your account almost instantly. With a credit card, you might not have to pay that money for up to 2 months! Most credit cards have a grace period of 20 days or more before interest starts to accrue, so use that time wisely! If you charged something immediately after your last statement arrived, you can usually hold off on actually paying for it, interest-free, for almost 2 whole months (the amount of time it takes for your next statement to arrive, plus the grace period to they allow you to pay it.) Of course, this time is reduced if you made the purchase near the close date of your billing cycle, but even then you can get 20 to 30 days of interest-free money during the grace period.

4. You’re offered a protracted warranty with some credit cards.

Most times, when you visit a popular electronics store, the salesman practically falls over himself bragging about the benefits of their expensive extended warranty. What you may not know is most major credit card providers give free extended warranty benefits on a few of their cards. American Express is particularly good about this. What’s not to love? You don’t break your bank, and they usually will throw on an extra year of security when you use the card to purchase items that qualify.

5. The safest way to shop online: Credit cards.

The only way to really shop online is with a good credit card, especially if you need protection from fraud or an item you think might go bad before its time. It’s much easier to track the charge, hold it, or dispute it. And if someone steals money off your credit card, you don’t have to pay it. Shopping online wouldn’t be what it is today without this added layer of protection.

6. You can analyze your expenses by using credit cards to help you budget.

A great way to track the purchases you make is by getting itemized statements (I personally am fond of both monthly and annual statements) that place expenses into categories broken down by type: like eating out, groceries, gas, etc. This feature costs nothing and is definitely a lot better than trying to save all your receipts and do it all by hand.

7. The world won’t end because your credit card is lost.

In the event that you notify the bank within 30 days of a lost or stolen card, by federal law your maximum liability is $50 (which is reduced to zero with most major card issuers). This isn’t the same with debit cards, and they have much higher expected liability.

– If you notify your bank within two business days after you’ve discovered your debit card missing, liability is up to $50.

– In the event that you forget to notify the bank after two business days, however, before 60 days after your bank statement is mailed to you, liability can go up to $300.

– Liability becomes unlimited if 2 months pass after your bank statement is received with listing of your non-contractual withdrawals.

When it comes to debit cards distributed by MasterCard and Visa, the liability is capped at $50, though that’s by a debit holder’s personal choice (no federal law protects you like credit cards do). Interestingly enough, if you ever plan to spend foolishly, or if you get robbed, credit would be safer than debit.

With all the bad press credit cards get, it’s easy to give up on them completely. But when credit cards are used correctly, they provide one of Western Culture’s greatest comforts. I realize it’s hard not to buy everything you want with them right now and worry about paying for it all later, but a small dose of self-control will get you everywhere.

Always remember: paying the card off every month is the most logical, and successful way to have financial peace of mind and beat the banker at his own game.

About The Guest Author: Thierry J. Snipes is a full-time freelance writer who enjoys reading, writing, research, singing, and watching movies. With over 5 years of writing experience in finance, small business, and cash loans, he’s always passionate and eager to craft enlightening prose.

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