Punctual Bill Payer Asks: What Am I Losing by Skipping Cash Back Credit Cards?

A Reddit user pays all his bills on time and covers them with plenty of money left over. However, he is not currently using a credit card for any purchases. He’s wondering if his decision not to have a card is causing him to miss out, especially given that he’s generally a responsible spender.

So, by skipping out on a cash back card, what is the poster missing? A lot of different benefits that cards can offer, including the following perks. 

Free money for everyday purchases

One of the biggest things the poster is missing out on is a chance to earn free money back on things that he has to buy anyway.

As long as you are responsible with your credit card spending and not likely to end up in debt that you can’t pay back, there is really no reason not to get a cash back card that returns a portion of your purchase price.

There are some great cash-back cards out there that offer up to 5% back on things that most people spend a lot of money on, like gas and groceries. There are also general cashback cards for people who want to keep things simple and not worry about rotating bonus categories, which typically offer around 2% back on all purchases.

Whichever kind you prefer, when there’s a card company out there that wants to pay back some of your funds, you shouldn’t turn that down. 

Added purchase protections

The Redditor is also missing out on added purchase protections by not charging things he buys on a credit card.

When you use your card, if the item you bought never shows up or is different from what you expected, you have the option to dispute the charges and get your money back. If you spend cash, you’re just out the money. 

You can also get many other purchase protections depending on the card. For example, you might get theft and damage protection or an extended warranty. These benefits can save you a lot of money under the right circumstances, so they are worth using a credit card to claim. 

A credit-building opportunity

Not using a credit card for purchases can also cause you to miss out on an easy opportunity to build credit. When you use your card and make payments on time, you develop a positive payment history. Your on-time payments are reported to the credit reporting agencies, and this helps to boost your score since payment history is the most important factor in the credit scoring process. 

Maintaining a credit utilization ratio below 30% (which means using less than 30% of your available credit) can also help you to increase your credit score, as this is the second most important factor in the credit scoring formula. By not using a card at all, the Reddit poster is missing the chance to raise his score by showing how he can use credit in moderation. 

A good credit score is really important, even if you don’t plan to take on a lot of debt. If you need a mortgage or a car loan, good credit will help you get it. Landlords and employers and insurance companies, and utility providers also look at credit scores when making decisions about whether to rent you an apartment, hire you, charge you affordable premiums, or keep your deposit low. 

You shouldn’t miss the chance to build credit for no reason, especially if you are financially responsible and confident you can make your payments on schedule. 

Don’t miss out on the many benefits a cash-back card offers

As you can see, there is a lot the Redditor is missing by foregoing a credit card. The poster should seriously consider getting a card ASAP — and so should everyone else who can trust themselves not to get too deeply into debt when they use one. As long as you aren’t at risk of getting in over your head, the benefits of a card are too good to pass up.

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