How I Became a Millionaire: My Top 3 Reasons for Relying Solely on Credit Cards
Credit cards offer a lot of flexibility in spending, but they can also lead to significant debt if not used responsibly. As of early 2024, Americans collectively owed $1.129 trillion in credit card debt, according to LendingTree.
However, when used wisely, credit cards come with numerous benefits. Tori Dunlap, a financial expert and author of the New York Times bestseller “Financial Feminist,” saved her first $100,000 by the age of 25. She then left her corporate job to start Her First $100K, a multi-million dollar business that helps women take control of their finances. Dunlap is a strong advocate for using credit cards and highlights several key benefits.
**Three Reasons to Use Credit Cards**
1. **Protection Against Fraud**: Credit cards typically offer fraud protection for unauthorized purchases. Federal law limits cardholders’ liability to $50 for unauthorized charges if the card is reported lost or stolen. In contrast, if someone steals your debit card and PIN, it can be much harder to recover the stolen funds.
2. **Earning Rewards**: Many credit cards provide reward points or miles for everyday purchases. These rewards can be used for luxury experiences, such as business-class flights or stays at expensive hotels, as Dunlap has done.
3. **Boosting Credit Score**: Regularly using a credit card and paying the bills on time are crucial for maintaining a good credit score. On-time payments account for 35% of your credit score, while 30% is based on how much of your available credit you use. Keeping balances low and paying off the full balance each month helps avoid high-interest charges and improves your credit score.