Credit Cards Can Be Your Friend

This topic frequently arises with our Baby Boomer clients who are reluctant to change the payment method they've used for the past 40 years, as well as with Gen Zers just beginning to earn an income. While change may not happen instantly, considering the following points might help ease your transition.

1. "Credit is King," meaning that having a strong credit history and the ability to borrow effectively is crucial for personal and business financial success. Relying solely on cash won't help you build a credit history.

   
   

2. Credit cards offer more security compared to cash or debit cards. If your cash is stolen or lost, recovering it is unlikely. If a debit card is stolen or lost, the chances of recovering stolen funds are higher than with cash, but it may take 3, 5, 7, or even 14 days for the bank to replenish the funds. Debit cards are directly linked to your bank account, which could put payments like mortgage, rent, car loans, or daycare fees at risk while waiting for the bank.

   
   

3. Don't overlook cash back benefits. Spending cash offers no extra perks, whereas many credit cards provide significant additional benefits. Every dollar spent on a credit card could earn you anything from cash back to discounts on airfare or hotels for your next vacation or business trip.

   
   

4. Convenience is another factor to consider. Credit cards are much more compact and easier to carry than cash or a checkbook. By 2025, most establishments will accept phone tap payments.

Lastly, and most importantly, to take advantage of a credit card, you must be disciplined and understand card utilization. Keep your utilization rate low and pay off the card in full before the closing date (preferred).

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