6 Reasons Millennials Should Be Paying With Plastic Instead of Cash

by Marc Felgar

Despite their ubiquity, the majority of Millennials are cutting up their credit cards.

While they deserve a tip of the hat for their attempt at fiscal responsibility, it may not be the best decision.

If we succumb to our impulses, credit cards certainly present a risk.

However, the benefits of plastic far outweigh the drawbacks of using cash, the relic of the 19th century.

In fact, here are six good reasons to keep your stash of cash in your sock drawer and use your credit card for every purchase you can:

1. Rewards

Whether you’re into miles, cash back or rewards, there’s no better way to get paid for spending your money than with a credit card.

You’ll get nothing for using cash and less than half as many rewards for using your debit card.

If you’re going to make a purchase, you might as well get rewarded for it by using your credit card.

Use your store's loyalty card (grocery, pharmacy, gas) and your rewards credit card, and you could be saving well over 5 percent.

That’s the power of credit card rewards. It really is found money.

2. Credit Rating

There’s no easier or faster way to build, maintain or rebuild your credit score than with a credit card.

Even if you use your credit card and pay down your entire credit card statement every month, you’re still building your credit score.

Using cash, debit or prepaid cards won’t improve your credit rating at all.

If you want access to a mortgage, car loan, lease and even cheap insurance rates, a strong credit score will be required.

Using your credit card responsibly is the easiest and fastest way to do so.

If you’re worried about paying on time, just link your credit card to preauthorized payment from your checking account, and pay down your balance automatically every month.

This is a hands-free way to ensure your credit score goes up, not down.

3. Recordkeeping

Consolidating all of your spending onto your credit card makes budgeting and keeping track of your spending a breeze.

As opposed to when you use cash or multiple payment methods, you’ll be able to see all your purchases on one monthly statement.

For the really ambitious, you can even link your credit card and checking account to budgeting programs like Mint to show you how much you spend on restaurants, movies, groceries, gas and pharmacies.

Doing so is a great tool to help you monitor how much you spend by merchant category, relative to how much you make and save.

This is the first step toward good money management.

4. Protection

One of the big advantages of a credit card is protection in many forms.

Lose your wallet with your credit card in it? No problem.

Call it in, cancel your card and replace it.

If you lose your wallet with cash in it, it’s gone forever.

Have a fraudulent charge on your card? Your credit card company is on the hook for the unauthorized charge.

Purchase your camera on your credit card and crack the lens by mistake?

No worries, you may be covered by your card’s 90-day purchase protection plan against theft, damage or loss.

Buy a TV that suddenly doesn’t work after a year? Check to see if your credit card comes with an extended manufacturer’s warranty.

Book a trip three months in advance, only to cancel at the last minute because your son gets an ear infection?

No biggie, you may be covered by your credit card’s trip cancellation insurance.

These are just some of the protections using your credit card instead of cash, debit or prepaid cards may offer you.

5. Automated Billing

Whether it’s your phone, cable, newspaper, rent or utility’s monthly bill, nothing’s easier than just having your provider charge your credit card on a recurring basis.

Credit cards are great for monthly recurring billing because you’ll get points for your expenses, and you won’t have to worry about having enough cash in your account to avoid overdraft fees.

Also, if you ever find any super aggressive recurring billers who charge you after you cancelled a subscription or once your 30-day trial period ends, you can call your credit card company to report the unauthorized charge and have it reversed.

It’s much harder getting your money back if you paid via your debit card because the money’s already left your account.

6. Convenience

Lastly, there’s convenience.

With Visa and MasterCard accepted just about everywhere — and even required for some purchases like airline reservations, hotels and car rentals — plastic is just easy.

Mobile payments such as ApplePay are making credit card payments even more convenient.

If you pay by cash, you have to make sure you have enough on you at all times, pay fees just to withdraw your own money from the ATM and carry bills and coins, which just aren’t necessary anymore.

So, there you have it: six solid reasons to give cash and debit the boot and start using your credit card for every purchase you can.

Just remember: If you really want to treat your credit card as a payment mechanism as opposed to a credit line, make sure to set up preauthorized payments from your checking account to your credit card, to pay down your entire credit card bill every month.