Credit Cards? GOOD OR BAD?

[Joshua D.]

How many of you out there use a Credit card for your investing BIZ or personal life? 

My wife and I don't use them because of the Dave Ramsey movement, but now that we are doing well with money I might consider it?  what are your thoughts? 

[Shaun Reilly]

If you don't spend money you don't have then I will almost say it is stupid NOT to use credit cards.  

Much more convenient than carrying around a ton of cash, gives you a nice log every month of all your purchases, is a 30 day interest free loan if you don't carry a balance and every card these days has some kind of reward program where you can get stuff just by making purchases you would anyway.

Some people do very well with miles and some will work great deals on other rewards that they use a lot.  I like Discover where you can get discounted gift cards.  They have a lot of $25 cards for $20 in points.  Don't need a math degree to see that you get an automatic 20% return cashing in the money they gave me for no obvious reason to start.

Even if you don't do anything amazing if you have a card that pays back 1% and all you do is take a dollar for dollar statement credit if you spend $1,000 then you only need to pay $990 to pay off your balance.

With some store cards like Home Depot and Lowes if you make a purchase above $299 you automatically get at least 6 months of interest free financing as long as you payoff the balance when the promo period is over.  So say you make a $400 Home Depot purchase and instead of paying cash you used their credit card and put the $400 in a "high yield" savings account getting like 0.7%, well at the end of 6 months you made $14 and can pay the balance off in full.

These examples are about the lamest possible way to use the rewards programs or utilizing the free financing but even if you only did this level there is no reason to NOT take the free stuff and/or money these companies want to give you.

Also of course having, using and then paying off cards every month will build your credit up much more than someone without any cards that pays cash for everything.  In fact the 2nd person will probably have pretty mediocre credit.

Finally of course the life line they can provide if something bad does happen.  While you don't want to just spend money you don't have if you did have 1 person lose a job and income is really tight for a few months you have more options.  Maybe you do tighten things up but you still have like a family of 4 and layout like a $100 a week for groceries.  For a couple of months when income is low while that person gets a new job it might look nice to only paying $10 at the end of the month than $400 throughout the month.

Credit cards are really only a problem if you use them to buy crap you don't need and can't afford if you did need to use cash.  If you are just a little disciplined then there are a ton of benefits with no particular drawbacks.