This week, I was reminded of why I’m a fan of credit cards. (Not that I was on the fence about it! After all, I’ve enjoyed tens of thousands of dollars worth of flights from credit card rewards). I just don’t talk about it much because I don’t want a poor money manager to adopt my ideas and ruin their finances.
To start, here are a few things I believe about credit cards:
- For some people, credit cards are EXTREMELY DETRIMENTAL to their finances.
- For other people, credit cards are EXTREMELY VALUABLE (in terms of convenience and cost savings) to some. One year, I added up how much money I saved by using a card with 0% foreign currency exchange, using a card with primary auto insurance, and the cash/miles value from the credit card. Even if I did spend an average of 10% more, it was cheaper for me to use a credit card.
Sure, there are reasons why some people don’t use credit cards, and I’d be the first to pat you on the back for it. I’ll never make it my agenda to try and convince someone who doesn’t use a credit card that they’re dumb – as long as they return the courtesy.
Here’s the event that reminded me of the value of credit cards:
On my way to one of my kids’ soccer games, I stopped at CVS and pulled a credit card out of my wallet. I *felt* like I might have dropped another credit card, but when I leaned over and looked on the ground, I didn’t see it. I convinced myself that I just imagined dropping it.
After spending two and a half hours watching the kids play soccer and then going to a carnival with the family, I didn’t even think about it again.
I didn’t think about the possible lost card until I got a fraud alert warning from Citi.
I guess I did drop the card, and either another citizen of the world used it fraudulently, or the credit card decided to enjoy it’s newly found freedom. Not wanting to judge another person, I’ll just assume that my credit card took itself to several places.
Turns out that on Saturday, my credit card went to Albertsons. While it was there, $140 was charged on the card. It visited a Redbox location, and another $8 was charged on the account. You know what goes good with a movie? Pizza. The next stop for my prodigal credit card was the Pizza company where $40 was charged. The wayward journey finally ended at Walmart with an attempted charge of $280. The charge was declined, and Citi contacted me.
Despite the fact that about $500 was charged on the card between 10 am Saturday and 10 pm, I won’t be financially liable for any of those charges.
All it took was a five minute phone conversation, and my job was done.
My wife had a similar experience about six months ago. Her credit card went missing, and about $400 was charged on the account. That was a Bank of America account, and they weren’t quite as responsible to have the charges reversed. It took them about two weeks to reverse the charges, but we weren’t liable for the fraudulent charges.
Yes, to be fair, if it was a debit card I would have some protection, but not the same level of protection as I have on my credit card. Either way, i get more benefits with a credit card, so even if they had the exact same benefits, I’d rather pull out a credit card when buying something.
Even before this happened, I was a satisfied credit card user.
About six months ago when my Nook broke, American Express refunded all the money even though the Nook was out of warrantee. Of course, that’s because American Express has a 3 year warrantee on electronics. I now buy all electronics with an eligible American Express card.
While I clearly recognize that credit cards are dangerous from some, I always admit they are also just as beneficial for others.