That’s the Golden Rule—use a credit card before a debit card or cash. I have not used my debit card in years. I have a $20 bill in my backpack (not my wallet) that has been there since the holidays in 2019.

Purchase everything you can using your credit cards. This comes as a surprise to a lot of people and in particular, Boomers and younger Millenials/Gen Z because they have been taught credit cards are ‘bad.’ But like most things, that is a matter of perspective and proper use. A friend of mine even said the other day, “I hate credit cards.”

Using them effectively takes a small bit of effort but one will quickly see how to benefit rather than feeling despair.

First rule: Pay your balance off in full every month.

Balances over time result in interest and that is really where the “bad” begins but also ends. With credit cards having upwards of 30% interest, the hemorrhaging of money becomes apparent very quickly. So, don’t carry a balance unless absolutely necessary.

Tip: If you do have to carry a balance, see if you can can find 0% introductory offer on a new card or a balance transfer to current card with 0% rates. These option may give you upwards of 24 months to pay off a balance with no interest.

My American Express Green Cardin college was a charge card so a balance paid in full was a requirement. A valuable lesson because I only paid what I spent. Meanwhile, I had other cards I did carry a balance and noticed that my $100 purchase quickly became $110, $120, etc. purchases.

I rarely carry much of a balance on any card since that lesson with a few exceptions. For example, I purchased a chair and ottoman from West Elm in 2021 and received twelve month, zero percent financing. No interest at all as long as I paid it off in twelve months but with some flexibility of paying over time. Good deal.

Reiterate: Pay your card off in full every months!

The second rule: Know your credit cards benefits.

Cash and debit cards have nowhere near the security and benefits that credit cards do. If you lose cash, it is gone. If someone else uses your debit card, you might be able to have some recourse but it isn’t very robust. Sometimes the dispute having to be dealt with in a very short time period or you forfeit your security.

This differs with credit cards. For example, a Platinum American Express has these purchase protections:

Purchase protection — 90 days of assurance that if the purchase is lost, damaged, or stolen, it will be replaced or the charge will be refunded up to $10,000 per item, up to $50,000 a year. Imagine buying a $3500 MacBook Pro and having a coffee spilled on it after owning it a week. Covered.
Return protection — 14 days, 30 days, more, less, sometimes we forget to return something or the return period was shorter than we thought. If the merchant will not take the item back, American Express will facilitate the return up to $300 per incident, $1000 per year, up to 90 days from date of purchase.
Extended warranty — know that your item’s manufacturer warranty gets boosted up to one year after. That month after the warranty ended, your credit card may very well continue to cover it.
Cell phone protection — having a computer in your pocket can be expensive. Buy your next iPhone on your credit card and your American Express will cover lost, damage, theft up to $800 (Some credit cards even more) when you buy the phone with the card and pay your bill using the same card.

There are exceptions to these benefits for every credit card or debit card but generally speaking, you’ll unlikely get the same service on a debit card (and never for cash) that you would with a credit card. One exception that some to mind, SoFi’s debit card does cover cell phones, but most of the other card benefits even beyond the list above do not apply.

These four points are only the beginning of the wisdom around credit cards. Cash back, points, exclusive deals, car insurance, trip insurance, upgrades, travel status, lounge access, and so much more comes with many credit cards and not debit/cash.

Some say cash is king but money is digital here in the 21st century and your credit card is the best way to proceed.

The third rule: Budget.

Putting all purchases through one or two credit cards give you the opportunity to budget more effectively—all purchases on statement. A bank account might be similar but there is a slow outward cash flow rather than one or two single payments. Think of your credit card payment like a mortgage or rent. At the begg

Occasionally, you need to spend a little more money than usual and don’t have the cash immediately available. Using your credit card can give you up to sixty days to sort out the details of paying for the unexpected. (See the tip above)

Consider how a company uses credit for the continuity of business. Company A needs to buy $10,000,000 in inventory to stock its shelves. It is highly unlikely they write a check or withdrawal cash—they more than likely do not have that cash available. They will “charge” it for all intents and purposes and pay the vendors later. That’s the power of credit—it’s what allows businesses to operate, and let’s us mortals do things that are not readily available in the moment.

Many credit card companies will also give you spend reports that show how and where you spend your money. And with everything you purchase on your cards, you’ll always know how much you have to pay versus the inverted piggy bank of a debit card—a dollar here, a few dollars there, and now you don’t have money for your car payment. (Note: your car note probably can not be paid with a credit card but that is one of few expenses that can not.)

Credit cards are the most effective way to pay for the majority of your expenses and with even more amazing features than discussed, go out and use them to a massive advantage. While most of us do not like to read the “fine print” and the terms and conditions, for your card, it is usually fairly short and will give you infinite insight into how to utilize them effectively.

Here are a few cards I use and recommend, and a simple breakdown of what they are great for—find one that best fits your needs. Credit cards can sometimes feel be daunting with annual fees, spend categories, and the like, but come back to here to learn ways to make the most of these cards and even make a profit.