Credit cards can be better than cash.
Yes, you read that correctly. Credit cards are not evil.
They can be a great tool.
They are a fact of life and here to stay because they’ve been around for far too long and they have so much value.
Sound controversial? Let me explain.
Far too long…
As far back as the 1800s, consumers and merchants exchanged goods using credit, using credit coins and charge plates. This was long before any European debt crisis, sovereign bailouts and Great Recessions.
American Express was formed in 1850. Back then, it specialized in deliveries as a competitor to the U.S. Postal Service. In the early 1900s, department stores started to issue their own cards. By the late-1950s, this model was widespread. AMEX got on board in 1958 after the launch of the rival Diners Club card and J.C. Penney started issuing their credit card in 1959. The credit card snowball grew from there and thankfully for us, credit cards are here to stay.
So much value…
Credit cards make life convenient. Like cash, they are a tool but with far more benefits.
Here are some advantages of credit cards:
- Many offer protection against theft or fraud. Cash can’t do that.
- For travelling, most companies will not take a reservation without one. Cash can’t do that.
- They can offer a good way of keeping a detailed record of your spending. Cash can’t do that, you need to.
- They help you build up a history for future transactions. Cash can’t do that.
Consumers have tons of choice these days, cash-back cards, points and rewards cards, and prepaid credit cards to name a few.
I’ve owned all three of these since my late-teens. I can’t imagine my life without a credit card. I’ve used them to reserve a hotel room half-way around the world. I’ve secured concert tickets. I’ve bought my fridge and stove with it. I put gas in my car with it and I put food on my table every week with it.
Convenience can come at a cost. For some consumers, credit cards make it too easy to buy expensive and unnecessary things, but that’s another post regarding needs versus wants. Credit card terms and agreements need to be understood by consumers. Annual fees, transaction fees, annual percentage rates and financing charges are a few. But, here’s the thing – terms and conditions should come with spending your cash too.
Credit cards like cash are a great tool if understood and applied wisely. Regardless if it’s cash or card in hand, the same sensible consumer habits must prevail.
What’s your take on credit cards? An evil tool born from the financial industry? A convenient gift for the savvy spender?