I don't understand people who don't use credit cards. Not only do you get an interest free loan for 30 days, you also get rewards points. Perhaps even more importantly, you get fraud and conflict protection.
In “When Saving Money Is No Longer Worth Your Time But You Do It Anyway,” I called up my credit card company to dispute my $35 Walgreen charge out of principle because I felt the pharmacist had misled me. Instead of the credit card company filing a dispute, they simply credited me back $35 dollars, no questions asked.
Getting travel rewards points is great, but what I really like about a credit card is travel insurance. Discover It offers automatic travel accident insurance, reimbursement for expenses if your bag is lost or delayed, trip cancellation coverage, and $0 fraud liability. When I'm on vacation or traveling for business, the last thing I want is to stress about is crap that's outside of my control.
Instead of me spending hours disputing charges or recuperating losses, I'll just call the credit card company to dispute and recuperate for me. The older and wealthier you get, the less you want to sweat the small stuff.
HOW A CREDIT CARD RECENTLY SAVED ME MONEY AND A FRIENDSHIP
I have a friend who has a spending problem. He's accustomed to the finer things in life, but he doesn't make an income level to allow for such luxuries. This is a classic problem in America that results in people getting into crushing debt. So what are you going to do if you've maxed out your credit cards and can only afford to pay the minimum? Use a friend's credit card, of course!
About a year before this incident, I gave my friend my credit card while he was traveling to buy some “necessities” because his card was declined. Knowing that my friend was good for paying me back, I texted him my credit card's details. My friend did pay me back a month later and all was good.
Then one fine month, I checked my credit card statement to see a $468 charge at one of the finest restaurant establishments in Los Angeles. Perplexed, I called the credit card company to state that I never made such a charge. I wasn't really worried I'd be out $468 thanks to my credit card's history of taking care of me. As a writer, I was more interested in the story.
The credit card company opened up an investigation and mentioned I wouldn't have to pay the charge until they figured out what happened. During this time I did some Sherlock Holmesing on my own by seeing who on social media had been to Los Angles on the date of the charge. Lo and behold, my friend who borrowed my credit card from a year ago posted on Facebook a fabulous post of him and three women eating brunch at the establishment on that exact date!
Holy shitake mushroom! I can't believe my friend actually used my credit card to eat a $468 brunch and pay for the meal with my credit card. Just to make sure that my friend was indeed the perpetrator, I called the restaurant directly to ask about the charge. They didn't give me a name, but they did acknowledge the card was used by a person that fit my friend's description and apologized for what happened. Given I had a pretty good idea of who used my card, I told them not to press charges, but to at least credit my card back because I did not authorize the charge nor was I at the restaurant at the time.
The restaurant told me they had to first investigate, and would get back to me in a couple days. When they got back to me they said they didn't want any trouble and that my charge had been reversed. When I asked them how they could have charged my credit card when I wasn't physically present and without my permission, they said that apparently, the patron was good friends with one of their waiters. He just slipped the waiter my credit card info (remember my friend didn't physically have my credit card on him, only the info) and the waiter went ahead and punched in my digits.
Such conduct is completely unacceptable in the restaurant business in case you are wondering. In order for a credit card to be charged without the card or the person being physically present, the general practice is to fax over a copy of the card with a letter from the owner authorizing a charge to be made with a signature.
CONFRONTATION TIME
The restaurant apologized to me again, reversed the charges, fired the waiter, and offered to buy me lunch next time I'm in town. I'm definitely taking them up on the offer and inviting a couple of my friends. Furthermore, I've never spent over $100 a person for brunch, so that should be quite a boozy experience. Champagne and caviar for everyone!
I shot my friend a text and asked him how his brunch at the LA restaurant was. He immediately knew what was up and apologized, saying once again that his credit card was declined. I believed that his credit cards were all declined because he consistently spends way more than he makes. He's got a lot of pride, and when guys have a lot of pride and a desire to impress the ladies, spending lots of money becomes irrelevant, especially if it isn't your money!
My friend said he'd send me a check for the cost. I was tempted to accept his check given that would mean that I made $468 for my hassle, and I would force him to pay for what he purchased. But I told him to forget about it, and to never use my credit card again without asking me first. He said he'd send a check in the mail anyway to buy me lunch to make up for all the hassle. Fine, let's move on. The check never arrived.
What my friend did do was go back to the restaurant and settle the entire bill with cash. I'm sure it was an embarrassing experience, but something that was necessary to build character. I respect him for owning up to the situation, although I do feel bad for the waiter for getting let go. I specifically asked the restaurant to be merciful to any staff during their investigation. I told them that everything was probably just “a big misunderstanding.” But unfortunately, the restaurant didn't listen.
A CREDIT CARD RELIEVES STRESS
I'm a very forgiving person because I've messed up a ton in my life. I understand greed, taking advantage of friends, stealing, lying, wanting to make a good impression even though it was fake, and showing off because I've done all this stuff before growing up. Only when I started college did I really calm down and focus on being a more outstanding citizen. I just didn't care as much when I was growing up for some reason.
I realize that some people are just late bloomers. Just look out how many people still live with their parents in their 20s and 30s nowadays. We're delaying adulthood largely due to rising costs of tuition and housing. It makes a ton of sense to live with one's parents for several years after college to save on rent in order to buy a place or pay off student loans.
Perhaps true friends don't do what my friend just did. But this is the only time such an incidence has ever occurred. All other times have been good, and I don't expect this will ever happen again because I changed my credit card number. I'd much rather have harmony in my relationships that conflict.
Even though my friend charged $468, I knew with absolute certainty I wouldn't be at a monetary loss because my credit card company would protect me. The trick was for me to manage the credit card company from going FBI on the investigation so that my friend wouldn't get in trouble with the law. Having an acquaintance is better than having no acquaintance at all.
Whether it's buying a new product, going on vacation, or protecting yourself from fraudulent charges, using a credit card is an absolute no brainer. The rewards points are a great bonus, but the real benefit is peace of mind.
See: The Best Rewards Credit Cards Today
Credit Card Recommendation
Looking for an awesome travel rewards credit card? Check out the Chase Sapphire Preferred® Card and others. I use my Chase credit card for all my business and travel spending to get points for more free travel, insurance in case my bags are lost or my flight is stuck, and more insurance for defective products I buy and want to return. Everybody should have a credit card for the free 30 day credit. Just make sure to pay off your credit card every month in full! Check out some of the benefits:
- Earn 50,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. That's a ~$650 value right there.
- Named a ‘Best Credit Card' for Travel Rewards by MONEY Magazine.
- You get 2X points on travel and dining at restaurants & 1 point per dollar spent on all other purchases.
Updated for 2020 and beyond.
First off, I’m free any day of the week for a champagne brunch in LA, I’ll even pick you up from the airport :)
You know how I love credit cards so this post is right up my alley. I get legitimately pissed when I can’t pay with credit, it’s more convenient, gets you cash back, sign up bonuses, etc. I NEVER pay with cash unless I have to. That’s one of the reasons why I love Uber/Lyft actually(I’m now a Lyft driver btw) since paying taxis in cash always made me mad for whatever reason.
I don’t baby people either so if you’re dumb enough to spend more on a credit card than you have in your bank account that’s your problem not mine. I hate these little disclosures I see everywhere that say, “Only sign up for this card if you are responsible with your credit.” We’re all adults here…come on now.
I have had credit cards ever since I got out of college in 1985, and have never had any trouble with them. I am happy for the protections they provide that you talked about. My wife has had her card skimmed and fraudulently used two times. The first time, the thieves bought stuff with a fake card until they maxed the balance. It didn’t cost us anything. We just had to fill out an affidavit stating that the charges were not ours, and that was the last we ever heard of it. We were issued new cards. The second time, I caught the fraudulent charges just as they started to happen and immediately called the credit card company. They cancelled the cards, sent us new ones, and had us fill out another affidavit. No problems.
It’s for things like fraudulent charges that I never want an ATM debit charge card. We have just plain old ATM cards. If you have your debit card skimmed, the thieves can drain your account before you know it. Yes, the bank will pay you back, but in the interim, your bank account is empty. Hopefully, no one tries to cash an outstanding check against the account, or you will have to pay an overcharge fee. My wife and I treat our credit cards like debit cards and do not charge more than what is in our bank account. We always pay the cards off in full every month.
Wow, that’s quite a story!
At least your friend had the integrity to go back and pay the bill, even after they took off the charge.
My wife and I have had our fair share of random fraudulent charges, but the card companies always take care of them quickly. It seems like I have actually had the most trouble with my BofA debit card.
As far as credit cards, I think they can be great. My wife and I use them and pay them off monthly. I always tell people that credit cards are fine as long as you are responsible, but if you fail to pay them off monthly and continue to have issues with them, cancel them all immediately. I have seen the worst cases of people spending there way to bankruptcy, but for most, there is no reason not to use them.
Yeah, kinda nuts, but not too much surprises me anymore. Money makes folks do silly things, so do women for men who like women.
Like the story…love your blog.
When traveling abroad, I always carry 2 credit cards with ‘zero’ foreign transaction fees and 1 debit card with no fees (1 of the 3 cards should have a smart chip tech on it). This gives me a whole lot of ‘piece of mind’ as it covers most financial needs and situations.
– minimize cash on hand
– no fees
– protection w/ CCs
– backup in case one card or another is not accepted
Sam, you are more forgiving now because you have the money.
Imagine that you just started out and trying to save every penny.
Jay, you are probably right. Having money allows you to not worry about money as much. You still worry, but you don’t let things like this bend you out of shape. I’m really more interested in learning how this could have happened and sharing the story.
The crazier the situation, the better actually!
I use credit cards 100% of the time! So much happens nowadays with credit/debit cards, I like the safety of removing erroneous charges. A fe w years ago, I mistakenly bought fake Adidas running shoes. Visa not only refunded my charge, but reimbursed me for (postage) returning the shoes.
Please tell where you were able to buy fake Adidas shoes?!
It was online, but I thought it was authentic. The old axiom is still true, “if it is too good to be true, it probably isn’t.” The price was pretty good. $110 Adidas shoes for $78 delivered!Their website looked just like the real Adidas site. Afterward, I even reported it to Adidas. My first clue was the shoes were drop shipped from China. When I saw them, there were obvious things wrong. The only positive part of the experience was Visa who resolved the problem.
“…you get fraud and conflict protection.” Visa also has fraud protection for a debit card when you sign for a purchase (do not use your PIN). Our spending rate dropped and our saving rate skyrocketed when we switched to using cash and a debit card. The savings we created from not spending was equivalent to any reward points we would get.
You are right, and good to know a debit card has helped you and your family save!
So true and awesome job and time spent publicizing this very fact!
From the last almost decade I’ve been using credit cards, I have not only saved a lot of money otherwise spent on interests through balance transfers but also gained a lot by earning 2% cash back on all my purchases.
In good old days, when the banks used to pay a lot money on deposits, I regularly used to borrow from Credit card companies at 0% (and of course repay it on time). Also, I must have earned at least $ 5000 + back from my then Charles Schwab 2% cash rewards card and now American Express Fidelity 2% back towards 529 plan.
All this after the fact that you get Travel Insurance, ability to dispute transactions, never needing to carry physical cash and other services.
All you need to do is play your part well – repay on time, and keep a track of your expenditure. Why wouldn’t anybody want to use it?
One thing that always gets mentioned with credit cards is there fraud protection, well anyone with a Visa/Mastercard logo has that same fraud protection with your debit card. The bank will file what’s called a Reg E claim, and like the credit card will do an investigation on the transaction.
I believe credit cards should be treated like alcohol. If you are a recovering alcoholic you shouldn’t even own a credit card. Since I’m in recovery from credit cards, I refuse to use them, saves me from everything bad.
Maybe I do not know the card agreement of your credit card but I thought “No One Else” can use your credit card (with your name on it) other than yourself. In this case, as soon as your friend “borrow” your card, you are liable (at least partially) for whatever he is going to do with the card (or the info on the card). Maybe? Any lawyers here? Just curious.
On the side, I am a big fan of CCs as I used to get a lot of miles by open/close many airline cards. Too bad, they changed their rules (because 2008!) so I can no longer keep opening the same card and get the new card bonus miles.
With permission, another can use your credit card. (signed faxed statement with card info for the restaurant example).
Or when a princess uses her rich daddy’s credit card to go shopping, is another example.
Another benefit of using a cc is that it makes it easier to track your personal finances. Instead of 100 different transactions to enter into your accounting software, you just have the one credit card payment per month. Can easily see that your average monthly spending is $1,000 or $2,000 or whatever.
I do 99.9% of all spending on CC. So my personal expenses are simplified to 12 transactions for the year. I use my debit card as a credit card for business purchases. That way they get listed as separate transactions instead of one monthly payment. Business expenses should be categorized for deductions while it is not necessary for personal unless you really need the extra detail.
Great point. If you know what your cash usage is per month, then you can easily calculate expenses.
Wow, that’s quite a story. You’re a better friend than I. I never would have let someone use my card, and I definitely wouldn’t have remained so calm about my friend using the card without my permission if I had let them use it in the past!
I use a credit card for 99.9% of the purchases I make. Mainly for the rewards points, but the ability to easily dispute charges doesn’t go overlooked. I lost my card before and had someone ring up a few charges on it before I was able to cancel it. One phone call took care of it all and I wasn’t liable for any of the charges I didn’t make.
It’s because I knew with high certainty I would get all my money back that I wasn’t sweating the situation. Peace of mind using a credit card is the thesis of this post. I’ve got a big financial company to do battles for me as soon as I call something in. Sometimes, they’ll catch things for me.
I love the perspective you have, Sam. I, too, have made a lifetime of foolish and destructive mistakes — best to remember that when one of our loved ones does the same.
Yes, sir. Mistakes are inevitable for everyone.
I hear you! It baffles me how many people shun credit cards when they can be such excellent tools. The best experience I have had was signing up for the Amazon rewards card. I don’t pay any maintenance fees for having one and I get bonuses when it’s used online. I set up all my monthly bills – things I debt it anyway – and pay the bills off immediately. Just about each quarter I have enough points on Amazon to get myself a cool book or two and a gift for a family member, plus free shipping. It’s awesome!
Perhaps you could consider the “help” that you are giving your friend. If he truly has a problem with finances and credit, giving him access to your card in his definition of “times of trouble” may not really be helping anyone.
Some times the most loving thing someone can do for another is to let them fall; allow them to feel the full extent of the consequences of their actions.
Having empathy and wanting to help others is very noble, however how we help others has to be carefully considered.
Maybe I wasn’t clear in writing this post. The first incident he paid back no problem. A year later this happened to my surprise.
I never get why people spend with debit cards today! If you’re still using a debit Visa/MC, you might as well pay with a real credit card. The credit card protection laws in the US do not apply to bank-run Visa/MC debit cards! So when someone gets your debit card number and clears out your checking, you’re without that cash for as many days as your bank decides to take to reimburse you–and depending on bank policy, you still may be on the hook for a portion of the overdraft. But if the fraudulent transaction was a traditional credit card, like your experience shows, you don’t have to worry about paying the charges whatsoever.
If you use cash only, that’s one thing. But if you’re using the plastic Visa/MC debit card, switch to a real credit card. Get a small balance limit if you’re paranoid about overspending, or set alerts on the credit card to email you when you hit a certain spending threshold. Then pay that balance in full every month and you get access to great credit card rewards in the process!
The only time I use my debit card now is to take out cash from the atm. :)
Limiting the balance is a great idea for those who feel they might go crazy, cray with credit card spending.
I have had credit cards dispute charges for me. You are right, it’s great. I love the protection and the rewards. We pay off our credit cards every month.
I also think using a credit card (responsibly) is safer, especially more so than a debit card. Recently there was a story on the news about how a local Del Taco’s credit card swiper was adding an extra zero onto every order. A few people who used their debit cards had their bank accounts wiped out. Had they used a credit card instead, they could have quickly disputed the charge with their credit card company – and still have the cash in the bank! With a bank, it’s harder to have money refunded to your bank account.
Wow, shady!
The story you give should answer the first line of this post. Many people cannot be trusted with a credit card. Not to the point where they are being fraudulent like your friend, but to the point that apparently got your friend in trouble. For people like him, and there are probably many, the dangers of a credit card likely far outweigh any potential benefits. For others who are more responsible, credit cards may provide a benefit. However, though I use one for similar reasons to you and pay it off every month, I’m quite sure that I spend more than I otherwise would if I didn’t have a credit card and was forced to pay cash for everything.
Yes, good point. My story’s intention is to tie things back to the intro. So I guess if folks do encounter people who don’t use credit cards, then one must therefore presume, rightly or wrongly, they have a spending or financial problem.
By the way– I use credit cards for everything. For all the reasons you cite.
Sam:
Like you, I would not make a stink and I would not press charges…… but I would be writing this friend off my list.
To me, that just crosses the line. A true friend would not do that.
If he was sorry– the check he promised would have arrived.
I think that it is more than immaturity as you implied. This guy is going to keep crossing lines
until he finds himself sharing cell with Mr. Madoff.
Let’s see what happens. I’m very forgiving in general. We see each other about once a year, so maybe he’ll make it up to me.
You are a nicer person than me. I would’ve never spoken to that so-called “friend” again!
I love using credit cards for the reasons you’ve mentioned. We got trapped in Jamaica for two additional days this winter, and our credit card travel insurance picked up the bill for two additional nights at the resort and a few meals.
I remember the story. Gotta love that!
I’m amazed that you don’t seem to have a problem with the issue that the restaurant is out almost $500! Yes, the waiter should not have accepted the card number, but why should your friend get to skate away and let the restaurant take the hit? He stole that meal by fraudulently using your number. Don’t you feel any moral obligation to help make the establishment whole again? After all, you are partly responsible for giving out your card number for your friend to use in the first place.
Even though the restaurant violated the law and betrayed a consumer’s trust (imagine if everybody knew they accept anybody’s credit card), I guess I should feel sorry they are out a couple hundred bucks as you say (high margin establishment).
I should be responsible for my friend’s every move too since I gave him my card a year before the incident.
And even after I wrote that my friend went in to pay cash, you are right that his actions are my fault and I should know better. Thank you for your perspective.
In the post;
“What my friend did do was go back to the restaurant and settle the entire bill with cash. I’m sure it was an embarrassing experience, but something that was necessary to build character. I respect him for owning up to the situation, although I do feel bad for the waiter for getting let go. I specifically asked the restaurant to be merciful to any staff during their investigation. I told them that everything was probably just “a big misunderstanding.” But unfortunately, the restaurant didn’t listen.”
The restaurant let someone pay with a credit card number written on a piece of paper, without even verifying that the card belonged to the person who paid! As far as I’m concerned, it’s their fault as much as the friend who fraudulently used the card. They should eat it.
Can not agree more to it. In the US, the credit cards give such big benefits. Discover provides 90 day price match guarantee, 90 days return guarantee & full refund if the product is stolen within 90 days – They are almost insuring the product & that also free of cost :-)
Also Discover makes it so easy to file a dispute. I love Discover!!!
I like the Discover card too. My dad has one for the past 10 years and mentioned this exact same feature.
Sam, will you be my friend?
P.S. My wife, child and I ate BRUNCH today and spent $130. Preposterous! I vastly prefer our $28 greasy spoon breakfasts. Brunch is the ultimate ‘tweener meal. I loathe BRUNCH. But….sometimes one has to YES DEAR to keep the marriage rockin’. Sigh.
Yes, sir. No problem!
This post demonstrates a $120/PERSON brunch bill. Yours is cheap in comparison. Well done!