While he might offer sound guidance in many areas, Ramsey is simply mistaken here. I never carry a balance on my eight cards, I don’t overspend simply because I’m not using cash, and my finances are measurably improved thanks to credit cards.
Sure, some people struggle with credit and should stick to cash, but many others manage cards responsibly, and there are numerous compelling reasons to favor credit cards over cash.
10 Reasons Why You Might Prefer Credit Cards to Cash
Below are 10 reasons you might consider ignoring Ramsey’s advice and using credit cards instead.
1. Protection for Non-Return Purchases
A few months back I was billed incorrectly for a computer repair. Only after disputing the charge with my card issuer did the shop manager finally correct the bill. It’s reassuring to have a credit card company step in when needed.
Some retailers prohibit returns or mark clearance items as final sale. If you paid cash and encounter an issue, you’re typically out of luck.
But paying with a credit card allows you to lodge a dispute. The merchant’s “no refunds” sign doesn’t mean you should absorb the cost of a defective product — avoid using cash on no-return items and pay with a card.
The Fair Credit Billing Act allows you to withhold payment for goods that are damaged or of poor quality — it doesn’t apply just because you had a change of heart or picked the wrong size.
As BankRate.com notes, there are some caveats. You must first try to resolve the issue with the seller, the item generally must cost $50 or more, and the purchase should have been made within 100 miles of your home.
Thankfully, card issuers seldom enforce the last two points strictly, so you can usually dispute charges for items under $50 and for online or distant purchases.
2. Cash-Back and Rewards
I recently received a $25 check from points I redeemed on one of my cards. But keeping track of every cash-back rule can be cumbersome, so I rely on my PayPal Business Debit card for most routine buys.
I never need to call or fill out forms; the 1% cash back posts automatically to my PayPal balance each month.
If it’s that effortless, why would I use cash and forfeit that extra money?
If you can stay on top of rotating categories and program rules, you can do even better.
Some cards offer up to 5% back for certain purchase categories one month and switch to different categories the next.
With a bit of creativity, rewards cards can significantly boost your returns.
3. Signup Bonuses
This year my wife and I made $800 from credit card signup bonuses. We had to spend a set amount to qualify, but we charged our usual purchases to the card until we reached the threshold and earned the bonus; then we retired the card.
Here’s a question for Ramsey: If we never incur interest (we pay the balance in full each month), and we don’t buy more simply because it’s on plastic, are we financially better off using cash and giving up the $1,000 we’ll earn in bonuses and rewards this year?
If you pursue bonuses, you may be tempted to cancel cards after receiving the perk. However, closing accounts can lower your credit score. I do close them anyway, because my score rebounds and I’m not trying to secure a mortgage, so an optimal score isn’t essential.
If you’re concerned about score impacts, keep the accounts open but stop using them instead of cancelling. Or, if a card charges an annual fee, cancel just before the fee posts — in my experience, when you explain why, issuers often waive or remove the fee.
4. Extended Warranties
Some cards add extended warranty protection to purchases. For instance, my American Express card can extend warranties by up to an extra year on eligible items.
When blogger Xin Lu’s PlayStation 3 failed shortly after the manufacturer’s warranty expired, American Express covered the repair costs. “AMEX’s extended warranty saved us several hundred dollars,” she wrote on WiseBread.
It’s a solid reason to use the appropriate card when buying electronics, appliances, or anything with a short manufacturer warranty (typically five years or less). Keep original receipts in case a claim is needed.
5. Safer Travel
Having been robbed in Mexico and once losing five $20 bills on an Ecuadorian dance floor, I now carry very little cash on trips.
Cash makes you a target, and if it’s stolen or misplaced, you’re unlikely to recover it. If a credit card is lost or stolen, your maximum liability is $50 if you report it within two days. Some cards even offer zero-liability protection.
Plus, who wants to wander unfamiliar streets hunting for a currency exchange? Cards are often safer and far more convenient.
6. Better Currency Conversion
When my wife visited Spain recently, she exchanged dollars for euros at the airport. Big mistake.
Airport exchange desks frequently give poor rates and tack on high fees. Credit cards typically provide superior exchange rates, according to a recent study.
To avoid extra charges, use a card with no foreign transaction fees. There are lists of top travel cards that make this easy.
7. Rental Car Coverage
Last month I rented a car in Colorado for a week. The rental company’s collision damage waiver would have cost about $140 for the week, which I declined. Instead I charged the rental to a card that includes rental car insurance as a complimentary benefit.
Read the fine print carefully if you rely on your card’s rental coverage rather than buying the company’s waiver. Not every rental is covered, and you may still be liable for certain damages even with card-based insurance. It saved me a lot of money, though.
8. Additional Travel Perks
If you have the right card, there are many extra travel perks available. According to WiseBread, cards can offer benefits such as:
- Additional baggage loss insurance
- Emergency language interpretation services
- Medical evacuation assistance
- Protection for lost credit cards
- No checked bag fees
- Support for tracking lost luggage
Of course, you can also earn airline miles by booking flights with a card or get lounge access at airports. Review your card’s benefit guide to see what’s included.
9. Easier Expense Tracking
Credit cards make it easier to monitor spending. Receipts get misplaced, so online statements are a useful backup. Some issuers keep records for many years; Discover stores statements online for seven years.
Using a card simplifies tracking business expenses for tax deductions, but there are personal items you might also want a record of, such as charitable donations. Cards are helpful for documenting rental property expenses too.
If a move (or worse, a fire) destroys your receipts, log into your account and print old statements while they’re still available.
10. Convenience
If you relied solely on cash, you’d need to ensure you always carry enough money. That means frequent trips to the bank to top up your wallet and constantly checking your billfold to avoid an awkward moment at checkout.
Also, you must verify you received the correct change — mistakes happen. It’s simply more convenient to pull out a credit card and swipe it.
Cash or Card: My Verdict
To summarize the benefits of using cards rather than cash, here’s what I experienced this year:
- About $800 in credit card signup bonuses
- About $200 in cash-back rewards
- $140 saved on a car rental
- A disputed charge resolved because I paid with a card
- Safer international travel for my wife thanks to her credit cards
- Better currency conversion during her trip
- Simpler expense tracking
- Extended warranties on multiple purchases
- No interest charges on my cards
- No annual fees for most of my cards (one exception — but it gives me a free night at a Hyatt)
- No additional purchases compared to what we would have bought with cash
- Convenience
And yet Ramsey insists, “There is no positive side to credit card use.” He views credit cards as nothing but trouble, but I believe he hasn’t proven that point. The judgment on credit cards: Not guilty.
Michael Harlow is the author of “101 Odd Ways to Earn Cash” and runs EveryWayToEarnMoney.com. He’s been a repossessor, walking stick artisan, search evaluator, house renovator, tram operator, process server, mock juror, and roulette dealer; among the many ways he’s earned money, writing remains his favorite pursuit.
