In the personal finance world, I feel like all I read are posts about ditching the credit card and shifting to an all cash world. I’m not going to deny the potential downside of credit cards (or the upside of cash), but I just can’t stop myself from laying out all the benefits of doing the opposite – exclusively using a credit card instead of cash. The only important rule you have to remember with this method is that you have to pay off your full balance every month. But if you can do that then you can seriously improve your finances. This is what I do and I’ve never had a moment where I regret it.  In fact, I think it’s the smartest way to manage your money.

Here’s why:

Using a credit card instead of cash can have a huge positive impact on your personal finances. You just need to do it the right way! Here are the reasons you should be using a credit card instead of cash.


You Can Use Automatic Budgeting

When you put all of your spending onto one card, you are recording every single solitary transaction. And when you use free websites (Mint is what I use) or budgeting software, you have access to automatic budgeting so you know exactly how much you’re spending per vendor, per category, per day…really anything you can think of!  This is a huge time saver, not to mention a huge eye-opener about habits you may not have realized you had.


You Get Free Money

My husband likes to tell me that there’s no such thing as free money…but I disagree. And this is a perfect example of what I consider to be free money.  You go about spending as you  normally would, you pay off your complete balance every month as you normally would…and you get paid to do that through your points.  And nowadays, your options for payment are AMAZING.  My current credit card makes automatic payments directly towards my mortgage principal. My last credit card paid me in Amazon gift cards.  I’ve seen ones that pay down student loan debt, build up college funds, or just put cash directly into your checking account. You’re being paid to do something you would already do anyways.

Related article: How to Pay Off Your Student Loans Early


Accountability will Keep Your Spending in Check

It may be bittersweet, but your bank account will thank you for the feeling of accountability you will experience after only using a credit card.  Your transactions are not only there for you to stare at all month…but also your spouse or significant other (assuming you’ve made the leap to a joint account). This is the reason nutritionists will tell you to start a food journal if you want to lose weight – accountability can be a powerful force!  The same thing will happen to your budget…you’ll slowly stop spending on frivolous things because you won’t want to have to justify it to yourself all month.  


It is a Deterrent for Small Purchases

It’s way easier to pull out a dollar bill to buy a pack of gum than to use your credit card for the transaction.  You’ll get weird looks from the cashier and some places will even have a minimum purchase amount (it’s usually not more than $10)…which is GREAT. Rarely do you actually need those items, so you’re saving yourself from a huge chunk of impulse purchases (and as we all know, those little purchases quickly add up).


You Get Special Discounts for Automated Payments

As more and more companies start to push paperless billing, I’m encountering more and more potential discounts for using automated payments straight to my credit card (my car insurance does this).  And in cases where they don’t offer a discount, some will actually charge you to not use an automatic method.  Some of these cases may actually let you use a bank account or debit card but there’s another big benefit to credit cards that keeps me from doing this.  That being…


You Get Theft Protection

The amount of theft protection provided by credit cards boggles my mind.  I have had multiple instances of fraudulent charges on my card and it only takes one call to the credit card company to straighten out the situation.  They are (shockingly) very easy to work with, will wipe the charges off your card immediately, and will pursue the act of fraud on their own.  It is virtually no inconvenience to you other than the phone call.  The same is often done for debit cards, but the money that was pulled from your account may not come back immediately, which can be a real problem if they take a lot.  This happened to me with a bank account and it is one of the biggest reasons I stopped using a debit card.


It Builds Good Credit

This is a really big deal! Good credit can make a massive difference if you decide to take out a loan for something, especially if it’s for a mortgage.  If you can manage your credit card responsibly, your credit will start to gradually rise.


The Convenience is Unmatched

On the surface this seems like a superficial reason to use a credit card, but the more stress you can remove from your life, the better you’ll be.  Any opportunity you find to streamline a process, cut out the middleman, or automate your life will have a massive impact on your overall happiness.  And that will dramatically affect your finances, your health, and your family’s well-being.

Related article: 24 Different Ways to Automate Your Life


Using a credit card instead of cash can have a huge positive impact on your personal finances. You just need to do it the right way! Here are the reasons you should be using a credit card instead of cash.


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