Why you should use a credit card

This post comes from Len Penzo at partner blog Len Penzo dot Com.

When I was a kid, I had a Ouija board.

Thankfully, my nerdy friends and I were never possessed by evil spirits while conjuring up our dead relatives to see how they were doing (they're fine, thanks) or getting answers to burning questions like whether or not certain members of the junior high school cheerleading squad had the hots for us (they didn't -- at least not for me).

Even so, I know a lot of people who insist that Ouija boards are evil and should be avoided at all costs.

There are also folks who refuse to carry credit cards because they feel they're just as sinister as Ouija boards. Fair enough.

I understand that credit cards aren't for everybody, but I think they're a good thing. I've been using credit cards for more than 25 years without a single regret.

Of course, like many things in life, credit cards are a double-edged sword. So the decision on whether to embrace or eschew them comes down to understanding why you should and shouldn't use them.

Why you should use credit cards 

Credit cards provide us with the privilege of responsible short-term borrowing. Yes, they can be abused, but when used wisely and responsibly, credit cards provide valuable benefits, including:

• Convenience. With plastic, there's no need to carry wads of cash with you everywhere you go.
• Peace of mind. Unlike credit cards, if you lose your wallet, the cash in it is gone forever. Worse, those seen with large sums of cash are more vulnerable to being robbed. I hate being robbed. In fact, it's happened to me twice.
• Expense tracking. Credit card companies send monthly statements of all your purchases that make it very easy to track your expenses.
• Consumer protection. How many times have you bought something on the Internet and never received it? Or didn't get what was advertised and the merchant refused to give you your money back? A simple call to your credit card issuer is usually all that's required to fix the problem.
• Insurance benefits. Often, credit card companies offer product insurance if an item is stolen, and many offer free rental car insurance.
• Extended warranties. Some credit card companies will offer extended warranties on certain items.
• Credit history. When they're used responsibly, credit cards help establish your credit history and build your FICO scores,  which is especially valuable if you need longer-term credit extended to you. Those with high FICO scores get the most favorable interest rates, which can mean savings of tens or hundreds of thousands of dollars over the life of a loan.
• Rewards. Whether it's cash back, airline miles, free gasoline or other incentives, plenty of credit cards offer rewards. I've received thousands of dollars in cash and other perks over the years by simply using my credit card to make purchases.

• You're financially undisciplined. If you're unable to control your spending, a credit card is definitely not for you.
• You're unwilling to pay off your credit cards in full each month. Two of the most important benefits I mentioned as reasons for using credit cards, establishment of credit history and credit card rewards, can be neutralized -- or worse -- if you start to carry balances from month to month.
• You feel credit card companies are morally bankrupt. Some folks believe credit card companies take advantage of consumers. If that's you, then it makes little sense to keep one in your wallet.
• You're personally irresponsible. If you're unwilling to accept the terms you agree to when you sign on the dotted line -- whether you read the contract or not -- then you'll be much better off sticking with cash.

Yes, credit cards can get careless people into a lot of financial trouble, but that's no reason for responsible people to eschew them, any more than it makes sense to avoid using knives because they're potentially dangerous.

So there you have it. Hopefully, I've explained the pros and cons well enough to help you make an informed decision.

And, after all that, if you still find yourself unsure about whether or not credit cards are right for you, well, you can always try consulting a Ouija board.

More on Len Penzo dot Com and MSN Money:

• Quick tip: The easiest money you'll ever make
• How I survived 2 armed robberies
• 9 guilt-free ways to rip off your credit card company
• 5 ways to avoid credit card rip-offs
• 6 great cards for rebuilding credit
• Need help with a credit card spat?