When you consider all the different ways you can make a payment these days between cash, PayPal, debit card, credit card, and wire transfers, it begs the question as to which is the safest and the one that gives you the best bang for your buck in terms of rewards.
It won’t take anyone long to determine that credit cards are the most likely winner here. One Redditor, posting in r/personalfinance, is arguing exactly with a detailed post about all the reasons why a credit card is one of the safest and best payment options available today.
It’s Safer
One of the most important reasons a credit card is the best form of payment is the protection it provides. Unlike using a debit card, which pulls directly from your bank account, a credit card gives you time to pay off everything. So, there is a window of opportunity to catch any fraudulent or incorrect charges and remove them from your statement before making a payment.
This benefit comes from the idea that you are basically spending a creditor’s money first, so you have a 30-day window to ensure that everything on your statement is a transaction you know of. If there’s a purchase you didn’t make, don’t hesitate to contact your credit card provider right away. They will make sure not only that this purchase is researched, but that you are not responsible.
Builds Your Credit
As much as some personal finance talking heads want to publicly state that having a good credit score isn’t important, the reality couldn’t be any further from the truth. Having a good credit score can make all the difference, inside the United States at least, as to what you pay for a car, a cell phone, a home, an apartment, and so much more.
The reality around using credit cards is that it can help you establish good credit to get a low-interest loan when you want to take out your next mortgage or rent your next apartment. There is no question that having a good credit score, largely based on your debt-to-income ratio from your credit cards, can help you get a better rate than someone with bad credit.
Of course, the best thing you can do with a credit card is pay off your balance every month, or at the very least, never miss a payment. The best way to look at a credit card is to only purchase what you have in your bank account to pay off. This way, you can keep your spending and budget in check.
Purchase Protection
It doesn’t matter if you make a big or small purchase with a credit card, but when you do, you have purchase protection from all major credit card names. The level of purchase protection can vary. For example, a few cards will offer cell phone protection, while others offer broad stroke purchase protection for products like televisions, laptops, or appliances. The same goes for accidental damage coverage.
One of my personal favorite reasons to make big purchases with credit cards is to utilize an extended warranty. This perk often gives you one year extra on top of whatever warranty you already have on a product. My favorite example is that my iPhone gets a one-year warranty from Apple, but my Capital One card gives me a second year of coverage.
Cash-Back Rewards
Quite possibly the biggest reason to use a credit card right now is the cashback rewards or travel points/miles. If you purchase with a credit card, you can usually earn between 1-2% cashback using a flat rate card and as much as 5% using a rotating category card. This can add up to hundreds of dollars of “free” money you get back from your credit card provider every year.
The same goes for travel points, as hotel, airline, and general travel cards can help you earn enough rewards to either book a “free” trip or significantly reduce the overall cost of a trip.
Convenience
Another popular but still understated reason to use a credit card is convenience, such as how you can now use things like Apple Pay connected to a credit card right on your phone. In many areas, you don’t even need your physical credit card anymore, just your phone, so you can pay and go. The hope is that this becomes more prevalent in America and around the world to the point where we can leave our giant wallets home for good.
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