There’s a common misconception that credit cards are nothing but a shortcut to perpetual debt. On the contrary, purchase protection, healthy credit, and cash back rewards are just a few reasons why you should be using your credit card for nearly every purchase.

I used to think credit cards were bad.

I’d assume they were meant for people who can’t afford what they need or want, so they put it on a credit card. Credit cards were for shopaholics and the financially inept — the Carrie Bradshaws and Rachel Greens of the world. Especially when you add in factors like an annual fee, interest charges, and the very real risk of falling into deep credit card debt.

As a kid, I thought credit cards were a last resort. Now, new to my 30s, I’m learning the opposite is true. Instead of saving our credit cards for the rare, bulky buy, many of us need to make it our primary means of payment.

When used responsibly, credit cards are the ideal payment method for several reasons. Here are a few credit card advantages to keep in mind.

1. Credit cards protect your finances

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First, there’s the initial shock, then the frantic retracing of your steps. Finally, the panic sets in when you realize the horrible truth… your card is gone.

If you’re like me, you’ve lost your card on more than one occasion. In fact, many of us have experienced this moment (and the subsequent cycle of emotions), which is why credit card companies offer fraud and purchase protection.

If you discover a pile of fraudulent purchases on your statement or pay for a product and the merchant never delivers, you won’t have to foot the bill. The card issuer takes the hit — not you. It can take some time for a report of fraudulent charges to be reviewed, but you can generally count on being in the clear.

Many credit cards even offer insurance coverage and benefits for large purchases like cell phones and rental cars.

2. Credit cards earn you travel rewards or cash back

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We’ve all heard the cliche: you have to spend money to make money. Well, in the case of credit cards, this is sort of true. When you make an eligible purchase on your credit card, you can earn travel rewards or cash back for your spending… as in hundreds of dollars back!

The trick to utilizing credit card perks is to make sure you’re spending responsibly. This means making sure you’re not spending more than you can afford and avoiding the pressure to spend money solely to rack up rewards. Additionally, and perhaps most importantly, always (and I mean always) pay your credit card balance in full each month!

Related: Best rewards cards of 2022

3. Credit cards offer extended warranties

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Perhaps you were already in the habit of reaching for your credit card for large purchases, well aware of the many points and membership rewards you’d earn as a result. But credit cards also come with a wide variety of hidden benefits you may not know about.

Among these, I bet you weren’t aware (I certainly wasn’t) that many credit cards offer extended warranties on large purchases. For significant expenses like a new stove or sofa, some credit cards, like Capital One, provide an extended warranty on top of the manufacturer’s warranty. Of course, there are coverage limits, such as time and amount, so make sure you read the fine print before you buy.

4. Credit cards build your credit score

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Odds are you know you need a good credit score… but why?

The short answer is your credit report says a lot about your financial wellbeing. Think of it as a GPA of sorts. In the same way your GPA informs potential colleges and graduate schools of your academic history, your credit report gives landlords, lenders, and even some employers a snapshot of your financial history. If your score is low, these institutions have little incentive to trust you or work with you.

To develop and maintain a healthy credit score, it’s essential to use your credit card often and responsibly. Always pay the balance in full, keep your utilization ratio low, and make sure you don’t spend more than you have available.

5. Credit cards help you keep track of purchases

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Cash and checks certainly have their perks, but one significant downside to these forms of payment is that it can be easy to forget where your money has gone.

Credit cards (and debit cards), on the other hand, track your purchases for you. Every time you use your card, your online account updates automatically, making it easy for you to monitor your spending.

In fact, many major credit card companies even categorize your purchases. There’s a “View Trends” button online in my account with a fancy bar graph and pie chart revealing my spending habits in a couple of sharp and colorful images.

6. Credit cards prepare you for the future

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A friend of mine recently saved enough for a down payment on her first home. With her lease set to end in six months, she met with a loan officer, eager to start house hunting. Unfortunately, she hit a wall early in the application process: lack of credit history.

Many significant financial decisions ahead of you require a healthy credit score to move forward. If you plan to buy a new car or dream of being a homeowner, an established, reliable credit score is essential. But, even smaller financial applications for a rental property or insurance coverage, or even employment may require a peek into your credit history.

A credit card is the best and easiest way to start building credit now. For the sake of your future self, use your credit card often and responsibly.

Summary

There’s a myth surrounding credit cards that many of us, myself included, have grown up hearing: credit cards are bad.

I always thought of my credit card as something to be used only on rare occasions, but the reality is far from true. Credit cards have many benefits, from cash back to building credit. They’re even safer to use, thanks to perks like fraud and purchase protection.

The key is to make sure you’re using your credit card responsibly, which means paying your balance in full each month and limiting your spending to what you can afford. In the short term, you’ll earn all sorts of points and perks through your credit card; but in the long term, it will set you up for larger purchases like your first home!

Featured image: Dmytro Zinkevych/Shutterstock.com

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About the author

Photo of MoneyUnder30 writer Kate Van Pelt
Total Articles: 49
Kate Van Pelt is a writer and editor based in the Pacific Northwest. She has a bachelor’s degree in business management and English and has established her professional career in marketing and research writing. Since 2015, Kate has created educational materials covering a variety of financial topics, from home loans and credit cards to retirement accounts and estate planning. She spends her free time thrift shopping, making cocktails, and enjoying the outdoors with her dogs, Vira and Elmer.