The Lucrative Side of Credit Cards: Are Credit Cards Really That Bad?

credit card stack

credit cards

In the personal finance niche, credit cards tend to have a negative connotation. There are many stories about people climbing out of what is seemingly insurmountable credit card debt, myself included. If used incorrectly credit cards can be quite detrimental, but they don’t have to be.


Proper credit card use starts with education. Something I was lacking. Sure I knew I would have to pay the money back at some point, but I really had no true understanding what an annual interest rate was, or any concept of what an item paid on credit would really cost me. It is the lack of education that gets people in trouble. I honestly think there would be less credit card abuse if people truly understood what it was they were using.

With that education comes the understanding of the lucrative side of credit cards.

The Lucrative Side of Credit Cards

When used correctly, credit cards can be a very lucrative tool. Given the highly competitive credit card market, most cards have some sort of reward program that includes everything from frequent flier points/miles to cash back rewards. Credit card companies will usually entice you with a nice ‘signing bonus’ of some sort. Be it a lump sum of reward points or an attractive introductory interest rate, anything that will appeal to you and encourage you to sign on and stay with them.

Convenience and Rewards

Anyone who uses credit cards regularly will tell you their main reason for doing so is convenience. Rarely will you come across a store that doesn’t accept credit. Charging everything from groceries to haircuts, and immediately paying off a balance is a great way to build your credit history and gain rewards. Some people like to use their credit card to pay all utilities as well. Setting them up to be automatically charged, paying it off at the end of the month. Why not gain a reward for something you have to buy or pay for anyway?

Credit History

A huge advantage credit cards hold is the ability and power to build your credit history. Charging items and paying off the balance is a great way to build a strong credit history. While there are other ways to build credit history, charging  and paying off your credit card is fast and easy. Just make sure you pay it off in full, leaving any balance means interest will be charged!


Potentially a lesser known advantage to credit cards is insurance. Some are better than others, but credit cards offer everything from small life insurance policies to lost luggage travel insurance. A friend of mine works for one of Canada’s major banks. One of the main credit cards the bank provides actually insures items over $500 for a certain time period, if purchased on the card. One of her clients bought a new flat-screen television, charged it on his credit card, drove home and dropped it taking it out of his trunk. Didn’t even get it inside before it became unusable. Understandably, the store he purchased it from didn’t do anything about it since it was self-induced. A phone call to his credit card provider, along with proof of the accident, got him a full refund. With the funds available again, he was able to go buy a new TV. Had he paid with debit or cash he would be sitting in his living room staring at a blank wall.

It’s easy to forget about all the benefits that credit cards hold when we’re constantly hearing stories about the effects of their misuse. Credit cards have the potential to offer many perks that you otherwise wouldn’t have living on cash. Use wisely and enjoy.

What perks do you enjoy from your credit cards?

[Image courtesy of phanlop88 /]