The Benefits of Paying with Plastic
More and more American consumers are choosing to pay with plastic instead of paper these days. Many consumers are paying more frequently with a credit card or debit card due to convenience. It is simpler and quicker than using the more traditional methods of paying by cash or check.
Paying with a credit card or debit card allows a customer to handle transactions without fumbling for cash, digging out their checkbook and ID, or going to an ATM. With the vast majority of businesses adding the option of credit card and debit card payments, the convenience for shoppers is clear.
Some consumers feel that plastic payments are less safe than paper, but that is not actually true. Cash or checkbooks are easily lost or stolen, and you can’t simply call your credit card company to ask for a new one and have them take off any charges that might be made by someone else. Although identity theft is a concern for credit card and debit card users, for a careful credit or debit card user there are actually more safeguards than with paper.
Many merchants appreciate the assurance of payment with a credit or debit card. Checks are left in limbo until they clear at the bank. This float time can be a concern for merchants because the money doesn’t reach them right away.
Credit cards actually offer some benefits over debit cards, the other popular piece of plastic used for convenient payments. Debit cards, which are often linked to your checking account, sometimes have 24-hour charging limits, which keep you from making a larger purchase. Debit cards can in many ways act like credit cards when you sign for a purchase instead of using your PIN number, however, if your account comes up short you can get hit hard by insufficient fund fees.
If you use your credit card, an advantage to making costly purchases with plastic is that you get immediate purchase protection. Some credit cards will even automatically extend your product warranty. And you can dispute charges through your credit card company if the manufacturer doesn’t provide what you were promised or there is an error made by a merchant.
Additionally, making purchases with your credit card gives you some theft protection. Most credit card companies work very hard to resolve any theft issues because fraud is one of the industry’s biggest concerns. As long as you report a theft immediately, most credit cards offer a zero liability policy, meaning you won’t have to pay anything for purchases made by the thief with your card.
Using your credit card can even help you budget expenses each month, as long as you always pay your bill in full and on time. Your bill can then serve as a master receipt displaying an itemized list of everything you buy. Some credit cards will even categorize your purchases and send quarterly or annual summaries of your spending habits.
Using your credit card is also directly connected to your credit score. If you handle your credit card in a responsible way it is recorded in your credit history. Your score in that credit report is impacted strongly by the way you manage and use your credit card. Paying with plastic can be a great way to improve or maintain a good credit record.