7 Ways You're Losing Money By Not Using Credit Cards

Credit cards are no longer the evil boogeymonster they once were, so make sure you're reaping the rewards.
Updated April 11, 2024
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Raise your hand if you're wary of credit cards. Many of us came of age during the Great Recession, the housing foreclosure crisis, and the credit crunch, which taught us to hate getting into debt. As a result, I have many friends who avoid credit cards at all costs, choosing instead to stick with cash, checks, and prepaid cards. Others use online systems like Paypal and Venmo (and I'm sure they would even pay for things with shiny beads if they could).

Nevertheless, credit cards are no longer the evil boogeyman they once were, and you're probably losing money by not using one responsibly.

Here are seven ways you're missing out by not using a credit card.

Credit card rewards put money back in your pocket

When you’re using credit responsibly, the best rewards credit card can be a useful financial tool that allows you to earn rewards on things you’re already spending money on. Between valuable sign-up bonuses and earnings structures that apply to most, if not all, of your spending, not using a rewards credit card can mean you’re leaving money on the table.

Rewards credit cards aren’t reserved for any particular type of spender either. Whether you’re a beginner or an expert, high spender or casual shopper, anyone can find value in these cards. It doesn't matter if it's a straightforward rewards card like the Chase Freedom Unlimited® or a premium travel rewards card like the Chase Sapphire Reserve®, using a rewards credit card will ensure you’re earning a little something every time you swipe your card.

You’re essentially getting an interest-free loan

Just because you charge something to your credit card doesn’t mean you’ll have to pay interest on it. Even if you’re using a credit card that doesn’t offer a promotional 0% intro APR, paying interest can be easily avoided.

When you pay your balance in full and on time, you’re essentially getting an interest-free loan, often for up to two months. That’s because most credit cards provide a grace period, and this starts at the end of a billing cycle. The CARD Act of 2009 specifies that this interest-free grace period can be no less than 21 days from the statement date. So, with the length of your billing period being roughly 30 days, plus a minimum 21-day grace period, you have roughly two months of interest-free spending.

Build your credit and save on interest

Many people avoid credit cards when they're young, only to realize later on down the road that they can't get a home or car loan because they don't have a credit history. And if they do qualify for a loan, their score is too low due to their lack of credit history for them to receive the best interest rate. Even some utility companies and landlords check your credit before doing business with you, which could impact the amount of deposit you have to put down or if you get approved to live somewhere.

Opening a few credit cards that align with your spending habits and always paying your bills on time can build you a high credit score, which will allow you to save money on interest in the future when you need to borrow. With a strong credit history, you’ll also find doors opening to many top-rated credit cards and the many valuable perks that come with them.

Purchase protection benefits

Since most products don’t come with insurance, you’re usually on your own if something you buy is stolen or damaged. But if you pay with a credit card, there’s a good chance you’re covered through your card’s complimentary purchase protection. For example, a damage and theft protection policy protects many purchases for 60 days, while a return guarantee policy can ensure you get your money back (even if the store refuses a refund).

The American Express® Gold Card is a great example of a credit card that offers robust protection coverage. Cardmembers can get 90-day return protection, up to two extra years added to the original manufacturer’s warranty, and up to $10,000 per occurrence in purchase protection coverage on eligible purchases that were accidentally damaged, stolen, or lost. Debit cards generally don’t offer the same type of protection, so you’re better off using a credit card for your purchases.

You can avoid fees that come with prepaid cards

Prepaid cards are all the rage, but they’re full of fees. Some fees are only a few dollars a month, but they can add up to hundreds of dollars a year, depending on the card. While prepaid cards are useful if you don’t want to be tied to a specific bank, you’re missing out on a slew of valuable perks you’d otherwise get if you were to use a credit card.

Instead, use a credit card with no annual fee and avoid interest by paying your card in full each month. You’ll not only save money but you’ll also earn rewards every time you swipe your card.

You aren’t responsible for fraud

Cash can be stolen and checks can be used fraudulently, but there's nothing as safe as using a credit card. With a credit card, resolving an unauthorized charge on your statement usually takes just a quick call to the card issuer to initiate the process. Many credit card companies even offer a temporary refund pending the approval of the dispute. On the other hand, there are plenty of horror stories about banks taking weeks to sort out bad checks or debit card charges.

Many credit cards offer zero liability when it comes to fraud, so cardmembers can rest easy knowing they’re protected.

Don’t be taken advantage of

Have you ever paid someone or some company that didn't deliver? Maybe you received a product that wasn’t as described or it arrived damaged. If you paid using cash, a check, or a debit card, your hands might be tied as to what you can do to resolve the issue.

Credit card companies give you the option of requesting a chargeback if you don't receive what you paid for, or even if you receive something that's not as it was described when you bought it. So if you find yourself dealing with a company that refuses to do the right thing, know that your credit card company will have your back.

The bottom line on using credit cards

Credit cards sometimes get a bad rap, but when used properly, they can help you save money you may have otherwise missed out on. It’s not just about the rewards you can earn but also the many ancillary benefits you receive for being a cardmember.

If you aren’t currently a fan of credit cards, consider these seven ways you’re losing money — you might find credit cards aren’t the bogey monster many claim them to be.

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Author Details

Jason Steele Jason Steele is a journalist who specializes in covering credit cards, award travel, and other areas of personal finance. As one of the nation’s leading experts in the credit card industry, Jason’s work has been featured at mainstream outlets such as Yahoo! Finance, FinanceBuzz, MSN Money, and Business Insider.

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