I’m one of those people that whip out my Visa for every possible transaction, even if it’s just a measly dollar. To many people, this habit makes no sense, but to me, paying cash or debit makes no sense. I never carry a balance and always pay on time, so I don’t have to worry about paying ridiculous amounts in interest.
Our main credit card is the CIBC Aerogold Visa Infinite, which is tied to my Aeroplan account. Our secondary/back up credit card is the PC Mastercard, which I use because it’s free and because Mastercard is the only credit card Costco currently accepts.
Advantages of shopping on credit card:
- I collect points on every dollar I spend. If I’m going to spend the money anyway, I might as well get rewarded for it. I get 1 Aeroplan point for every dollar I spend, but 1.5 points for places like gas stations, grocery stores, and drug stores.
- Like most premium credit cards (i.e. those with an annual fee), anything I purchase on my Visa is covered by their Purchase Security, meaning that everything is insured against loss, theft or damage for the first 90 days. This came in extremely handy after I had just purchased new glasses and my teething puppy had taken them off the table and eaten most of it, lenses included.
- Along with Purchase Security, my Visa offers Extended Protection Insurance, which doubles the Manufacturer’s Warranty, up to a maximum of 12 months. This is a seriously valuable feature for big ticket items like laptops, tablets, cell phones, TVs, etc.
- 15-day travel insurance (only 3 days if you’re 65+). Most, if not all corporate benefit plans include travel insurance, but if you don’t have any benefits, you may not need to purchase any additional coverage.
- Trip Cancellation and Trip Interruption Insurance. This covers sudden and unforeseeable circumstances, and are usually an add on almost any time you book travel. Do check the fine print though – only in researching for this post did I learn that Trip Cancellation only covers $1,000 per insured person.
- Auto Rental Collision and Loss Damage Insurance – If you’re renting a car out-of-pocket (i.e. not covered by an insurance company due to an accident claim), you typically have to pay extra for car insurance… unless you pay for it on a premium credit card!
- Protection against fraud and theft. If someone steals your credit card and uses it, you aren’t held liable for the charges. With cash, you’re just out of luck.
- Protection against merchant bankruptcy. Back in 2008, I had booked a flight to visit my aunt in England on Zoom Airlines. A few weeks before I was scheduled to leave, I read in the news that the airlines had gone bankrupt! I read and reread the articles several times before it sunk in – the airlines had gone bankrupt, I no longer had a flight out to the UK, and I was out over $700! I had paid for it on my Visa, so I called the credit card company. Luckily, as soon as I rebooked a flight on another airline, they refunded my original purchase!
- It’s easier and more convenient than cash. I don’t need to stop at ATMs to get cash, all of my transactions are recorded online, and I’m less tempted to reach into my purse for some loose change when I pass by a vending machine full of chocolate 😉
- It builds up your credit score! This is really important for everyone, but especially if you’re trying to buy a house or will need to renew your mortgage.
- Free short-term loan! My payment isn’t due until 3 weeks after my statement, so if I purchase something at the very beginning of my statement period, I could have up to 7 weeks interest-free. Obviously, this only holds true if you pay your balance in full each and every month on or before the due date.
Other reasons to shop on credit card:
- $500,000 in common carrier accident insurance.
- Flight delay and baggage insurance.
- Cash advances are available to you, if you so choose/need.
- Safety – not carrying cash around with you makes you less of a target for theft, which can be especially reassuring when you’re travelling.
- Not having to carry lots of different currencies if you’re touring several different countries (as long as those countries widely accept credit cards).
- Being able to shop online from the convenience of your own home. No getting dressed, fighting traffic and looking for parking spots!
- It can be a great source of emergency cash (e.g. car breaks down, unexpectedly having to travel to visit sick or ailing family members, etc.)
- It can help you stick to your budget – my Visa allows me to set limits for different categories, and will send me alerts every time I’ve exceeded a limit.
- Having a higher credit score (from using a credit card) can save you thousands of dollars. The higher your credit score, the lower your interest rate, and on large purchases like houses, which are amortized over many years, even the smallest decrease in percentage points can mean thousands of dollars!
- You’re already paying for the privilege of earning rewards anyway, so you might as well reap the benefits! Companies have to pay credit card companies a percentage of every sale that’s made on credit card, so to compensate, businesses price their goods accordingly. The price you’re paying already has a credit card fee “built in” to it, so not using your credit card is really just overpaying for something!
Any other reasons why you like using your credit card?