We hear quite often how bad credit cards are, and depending on the guru of the moment, you may even hear that you should never use credit cards, and instead opt for cash.

I take a completely different view to this school of thought. There are no absolutes when it comes to spending and managing money. The most important thing is gaining the right knowledge to make the most financially responsible decisions.

As it relates to credit card versus cash, using a credit card instead of cash is the way to go because of the benefits that can be gained.  But before I discuss the reasons, I want to be clear about one thing.

BIG BIG Disclaimer!!  Do not get into debt using credit cards instead of cash. You can achieve great benefits from using a credit card without getting into any type of debt by paying off the balance by the due date. 

Now let’s discuss the top 4 reasons why it is better to use a credit card.

      1.They Are Safer

There are a number of reasons why using a credit card is safer than cash. One of the most obvious reasons is that if your wallet gets lost, or worse, you get robbed, your cash is gone forever. 

 If you are in the same unfortunate scenario, however, and the thief used your card to make large purchases before you are able to report this incident, you will be protected, and all charges will be reversed. 

There is also the added benefit that if you have a legitimate dispute of a purchase, the credit card company will act on your behalf to resolve it.

     2. Provides An Easier Way To Track Your Spending

Many people do not have a budget and those who do maintain one, are trying to find the easiest way to manage it. One great way to eliminate hours of searching for receipts and reconciling the cash you had to the cash spent, is to purchase everything on a credit card where you have real time access to all your purchases. 

This gives you a quick and easy way to compare what you have spent to your budget and even if you do not have a budget you can easily see whether you need to start curbing your spending. 

Depending on the credit card company, you may even see your spending categorized by the different businesses that you have made purchases from.

     3.You Can Build Credit

One of the quickest and easiest ways to show lenders that you are trustworthy, is to make small purchases, keep your balance low, and pay ontime. As you continue to do this, overtime you will see your credit improve, and you will begin to get better credit card offers.

Having good credit opens the door to many other opportunities, including lowering your insurance rate, obtaining a mortgage and even getting certain jobs that you may not have been eligible to apply for with a negative credit history.

See: How Does Negative Credit Score Affect Your Finances

     4. You Can Earn Rewards And Miles

Personally, being an avid traveller, this is one of my all time favorite benefits of using a credit card. First things i want to remind you is that you do not want adjust your spending to earn points and rewards, or you will end up in debt and miss out on the wonderful benefits of using credit card instead of cash.But by spending on everyday items, and paying off by the billing due date, you can reap many rewards, depending on the type of card.

Many cards offer points that can be used for miles which can be used for flights, hotels or you can cash them in and use them however you choose. You also get the added benefits of different types of travel upgrades. Want to move from economy to first class?  Use those miles. 

 You want to do your research on the best type of card to get, and you may even decide to use 2 different cards for maximum benefits. You just want to be aware of the annual fees and ensure that you are not trading off an expense for a benefit.

Check out this CNBC article for some of the best rewards credit cards based on your particular needs. They have already done the hard work for you by analyzing  111 reward credit cards using the average American’s annual spending budget to find the best cards. 

As long as you know your goals for accessing and using these cards and you are responsible it is a no brainer that using a credit card is the way to go. If you want to learn more about sound money management and how to get on the path to financial freedom, take the free course The Art of Wealth Creation, and learn the 6 steps to creating a 6 or 7 figure retirement regardless of your current financial situation.

About Tanya

Tanya Taylor, CPA, MBA is the founder and CEO of Grow Your Wealth.  Her mission is to help professionals and business owners ditch bad debt and create a 6 or 7-figure retirement income by learning how money works in 6 steps so that they can build a legacy without feeling stuck.

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