What are the advantages of using a credit card?

Should you be using a credit card in this day and age especially in light of the burgeoning national debt? Some people still believe that it’s more advantageous to use cash or check instead of credit cards. Before we consider the advantages of using a credit card let’s first consider the well known disadvantages.

When you charge a credit card you are basically spending money that you don’t have. Whereas a debit card charge takes the money directly from your account, a credit card charge is a promise-to-pay note. This is why it is very important to always make the goal of spending less than you earn so that you can pay off the balance in full each month and avoid all interest charges.

The entire balance is due at the end of the month, or if you are willing to pay interest charges, then the balance can be carried over. The ease of use that credit cards offer has no doubt led to abuse by some consumers.

Some consumers can literally charge up to thousands of dollars in debt and be unable to pay anything more than the minimum monthly payment (which is basically just interest charges and can take quite a while to pay off - see our credit card payoff calculator and our credit card minimum payment calculator to see some concrete numbers for yourself). Yet, when used wisely, credit cards do have a number of advantages.

Primary Benefits of Charging Purchases

The disadvantages of using credit cards are well known. However, there are some definite advantages to charging an expense rather than paying cash.

No Cash Needed

First of all, using a credit card eliminates the need to carry cash or check. The merchant swipes the card and the transaction is recorded. The merchant charges the credit and the bank approves the transaction. This is especially convenient if you live in a high-crime area and fear being mugged for your cash. Obviously, the transaction process for a charge card is much less tiresome than writing a check and showing your ID.

Paper Trail

Another advantage is that since all credit card transactions are bank transactions you get to keep a copy of all of your purchases and returns. You can either wait for your monthly statement to arrive or view your previous statement online. Some credit card companies and banks even allow you to view a list of your latest purchases as they are charged. This trail of documentation lets you easily investigate fraud possibilities or misunderstandings. It can help you to resolve disputes and even to better organize your budget.


The single most overlooked advantage to using a credit card is that of the chargeback option. If you dispute an item that was charged, and have reasonable evidence in your favor, then your issuer will usually cancel the order and refund the money. Not only does this help you prevent against fraud and faulty products or services, but it also gives you a promise of satisfaction.

Whereas a merchant may not offer a refund for a product that was clearly inferior, if you are unsatisfied with a product you can ask for a reversal of the charge directly from the bank. This reversal returns to the merchant and is known as a chargeback.

The chargeback defense works so well that many merchants are now offering complete refunds if the customer is unsatisfied with the product. They would rather lose the sale than they would face the extra charges that accompany a charge back. This explains why many merchants today still do not accept credit cards. They can’t afford the extra expense and don’t like the fact that credit card purchases favor the consumer.

Other Benefits Associated with Credit Cards

Credit cards even have some advantages over debit cards. Whereas debit cards sometimes have 24-hour charging limits, credit cards have no limits except to your total amount of available credit. Credit cards also have low annual fees or even no annual fees. The fact that your credit card is backed by a major corporation also gives you certain advantages. Making an expensive purchase entitles you to extra protection that is not available with a debit or ATM card. Credit card companies can also provide protection against a stolen card.

Rewards and Perks

Another benefit to mention is that of extra rewards and perks that come along with the contract. Some credit card companies offer “reward points” or even gas rebate features. Credit card companies may provide theft insurance, free car rental insurance and extended warranties on products.

Rewards programs can be complex and if you are willing to read over the long contract you might find some unique benefits. Of course, we recommend using our free cash back credit card calculator that lets you input your approximate monthly spending in all of the major spending categories and then automatically and instantly calculates what your cash back savings would be for all of the top cash back credit cards.

For example, some companies reward you by giving you a cash back credit of 1% for all qualified purchases. That way if you spend over $2,000 per month you could expect a rebate of $20. That’s not exactly going to make you rich but it is a nice little extra that can only come from a credit card company. If you manage to save $20 a month that’s still over $200 a year in extra credit that you would normally lose and over 10 years that $20 savings every month will equal $2,400!

Auto Payments

Lastly, consider the advantage of automatic charges that is only available with a credit card issuer. You can automatically have your bills charged to your credit card every month and thus only pay one bill a month. This is very convenient if you don’t have a lot of free time and if you often times forget to pay bills by the due date.

Credit Building

If you mange your credit card accounts well by paying off charges promptly, you will increase the amount of credit your lender makes available. This will increase your credit to debt ratio and raise your credit score. This has numerous benefits when you look for other loans or even jobs.

A Helpful Tip—Online Comparison

If you are considering whether or not to buy a credit card, then try and weigh the advantages and disadvantages evenly. Remember that just because you have a credit card doesn’t mean that you have to buy every purchase with a credit card. You could keep the card for emergency use only and then pay the balance in full at the end of the month. This is the best way to do things and can prevent high interest charges from accumulating.

It’s important to find a credit card contract that has favorable terms for your financial situation. Ordinarily, in order to get favorable terms on a new account you would have to individually search every credit card issuer’s website and compare the terms.

An easier way to do this is to utilize our credit card chaser tool. Our web chaser tool allows you to compare all of the major credit card issuers in your area and choose a contract that’s right for you. Find out the advantages of a new credit card firsthand! Use the chaser tool to find a program that’s right for your budget. Get started finding the best credit cards now!

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!