3 reasons I will be keeping my credit card despite living a debt free life

I have written before about how I follow the Dave Ramsey Baby steps for clearing debt and managing our finances. Under that process it is recommend to close your credit card and to only use cash when making purchases.

However I also believe that you should tweak any plan to fit your own lifestyle and for us that means that we will not be closing our cards. This may not be the right choice for some people, if you find a credit card is too much temptation then by all means follow the plan and close them. But this is why we have chosen not to.

reasons I am keeping my credit card

Online spending

I nearly always use my credit card for online purchases. BUT I only use it if I have the cash, available in my bank account. As soon as I make the purchase I transfer the cash from my account to clear the card. If my details do get intercepted or hacked at least they can’t clear out my savings or affect the account our bills are paid from.

Emergencies when there is no wifi to transfer from our emergency fund.

We keep our £1k emergency fund in an online savings account. So if something does crop up when we are out or on holiday (such as the car breaking down and needing repairs, or a flat/burst tyre) we would need to use the emergency fund. However we may not have the time or the signal to be able to log into internet banking to transfer the money to our bank account. This way I can pay by credit card and pay it off from the emergency fund when we get home.

Greater protection on credit card for purchases over £100.

I always pay by credit card when making a purchase over £100. That is because by law the credit card company is equally liable if the purchase goes wrong. So if it isn’t delivered or as described, or it is damaged or faulty. If it is over £100 and you used your credit card, then under section 75 of the consumer credit act you can claim a refund from the credit card company if you get no luck from the retailer. There is a great article on the Which website that details your rights under this act in more detail

Despite the recent slip up when we moved with spending on my card. On a day to day basis I can ignore it and not have the temptation to spend on it. Leaving them open won’t be a good idea for everyone. But for now it is working for us.

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