8 reasons you should love credit cards
Paper or plastic? Here are eight reasons why credit cards beat cash (or debit cards) at the checkout line.
Like many consumer advocates, I'm certainly no fan of credit cards. It's hard to like plastic when I've done so many stories about people who end up in a financial death spiral due to revolving debt. (I've even written a book called "Life or Debt.")
And I can't begin to count the stories I've done over the last 20 years about banks abusing their card customers with usurious rates, unfair fees and all manner of sneaky tactics specifically designed to transfer wealth from Main Street to Wall Street.
With all the negative press and recent legislation exposing the seamy underbelly of the credit card industry, it's easy to believe that credit cards are the downfall of Western civilization. But maybe this pendulum has swung too far.
While it's true that gorging on credit can lead to untimely debt, it's also true that credit cards are an important part of a healthy financial diet.
Check out the following recent news story, then meet me on the other side for more.
Here are eight reasons why it can be wise to stash the cash and pull out the plastic.
The ability to dispute a charge isn't the best consumer protection -- your card company isn't going to side with you unless the defect is glaring -- but it's a lot better protection than you'd have if you paid with cash, which is none.
- Up to $50 if you notify the bank within two business days after you realize your debit card is missing.
- Up to $500 if you fail to notify the bank after two business days, but before 60 days after your bank statement is mailed to you.
- Unlimited if you still fail to notify the bank 60 days after your bank statement is mailed to you listing the unauthorized withdrawals.
Visa and MasterCard cap the liability on debit cards at $50, but that's voluntary. There's no federal law that protects you as there is with credit cards. So if you're planning to be either careless or mugged, a credit card is safer than a debit card or cash.
While not a perfect budgeting worksheet, it's better than nothing, especially since nothing is what it costs.
Single best way to create a new credit history or polish up a bad one? Effectively using credit cards.
Bottom line? With all the negative press surrounding credit cards these days, it's easy to throw out the baby with the bathwater. Properly used, credit cards are one of the greatest wonders of the modern financial world. And proper use, while maybe not easy to execute, is simple to define: Just pay them off every month.
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