Free Money: Why Even Frugal Folks Should Have a Credit Card

Just got back from FinCon. Of course I told everyone how I like to travel using credit card points & miles. Within the personal finance/FI/RE community, I was shocked how many people still don’t have credit cards.

And these are people who delight in number-crunching!

I understand the concerns about mismanagement, overspending, or accidentally missing a payment. But fact is, credit cards are part of adulting because your credit score is part of adulting.

Responsibly using credit is a sign to lenders that you qualify for lower rates and higher lines of credit. You can’t even rent an apartment without a credit check these days.

no annual fee credit cards

I’ve literally earned $1000s for free with no annual fee credit cards – everyone should!

And if you’re counting every penny, you definitely want a credit card. Because you can get back 2% of everything you spend. For completely free. Why wouldn’t anyone want that?

No annual fee credit cards are a no-brainer

My generation graduated college into a nonexistent job market because of the 2008 recession. I worked retail jobs, served tables, and poured drinks until I eventually found a staff job after months of sending job applications into the black hole of the internet.

For a long time, I innately distrusted money. After months of piecing together rent payments, there was no way I could afford a single misstep. One mistake would mean $100s of dollars in late fees – and I didn’t have it to throw away.

I knew credit cards, with their late payment fees, interest rates, and generational reputation, were prime evil. When I got my first one, I treated it like an animal that would turn on me at any second. I was terrified to mess it up.

a group of credit cards on a table

Ah, but a small sample of the 30+ cards I currently hold

Over the years, my attitude changed. I enjoy being in touch with my finances. My credit score hovers around 800.

I got a great rate on my first mortgage, and on an auto loan last year. My credit limits are high and utilization low. I pass every credit check with flying colors.

I’m not afraid of credit cards any more. Now, I make them work for me.

1. You need credit

If you ever want to:

  • Own a home
  • Rent your own place
  • Buy or lease a car
  • Get high-level jobs
  • Refinance student loans
  • Open a personal loan
  • Cosign for your kids or family…

Then you need a credit score. That’s only built by using credit lines responsibly. Opening a card with no annual fee is the easiest way to start building credit, even if you only charge something small and set up automatic payments every month.

Sooner or later, you’re going to need a good credit score. The earlier you begin, the better.

2. They offer protection

For consumer purchases, you get way more protection with a credit card than you do with a debit card. Some credit cards even offer price protection and extended warranties. If there’s fraud on your account, you’re NOT liable for the damages.

Debit cards are a direct link to your bank account. The second you swipe them, the money comes out. Credit cards offer a buffer should your card number fall into the wrong hands.

3. Better cash flow

When your credit card statement closes, you legally have a 28-day grace period to pay everything back in full. If you get paid every couple of weeks, there might be a few days per month when things get tight. Having a credit card – THAT YOU KNOW YOU WILL REPAY IN FULL – can give you better control of your finances.

I personally have internet, phone, Netflix, Spotify, insurance, electricity, and a couple of other services set to autopay. If those were randomly coming out of my checking account all month, I’d be a nervous wreck if my balance got low.

I much prefer to watch it roll in so I can strategize about when checks are coming in and when I can repay. If you can’t handle the payment cycles, try a service like Debitize that turns your credit card into a debit card.


Seriously! Imagine if you got 2% cashback on everything you spent. $2 back every time you spent $100. Over the course of a year. With a card that’s free to get and keep. It all adds up!

I’ve gotten $100s in free Roth IRA contributions with my Fidelity Visa, which earns 2% cashback on every purchase and has no annual fee.

And my Chase Freedom card has been a never-ending source of valuable Chase Ultimate Rewards points thanks to 5% cashback categories that change each quarter.

Chase Freedom Flex℠20,000 Chase Ultimate Rewards points
That's worth $200 in cashback rewards
5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
• $0 annual fee
• Excellent rotating 5X categories every quarter
• A great first Chase card
• Compare it here

Not using a free credit card to earn cash rewards is literally leaving free money on the table. Even if you don’t earn a lot, why say no to free money?

Money is a tool – and you can use it to make more

I love managing my money. I love looking at my balances, moving it around, and making it work for me. Multiple accounts at different banks don’t phase me.

Why? Because money is a tool.

a blue background with white text and money

It’s true

Money exists to bring you things that make you happy. And like any tool, it’s neither inherently good or bad. But the more skilled you are, the more finely you can sculpt your life, your reality, your future.

Some peeps think “money” is a dirty word. They don’t like watching it flow in and out. And they make careless mistakes that end up costing them… more money.

But you can NOT live without money. You have to pay for where you live, exchange dollars for food, and find a way to get to work.

And while, yes, credit card companies prey on carelessness, when you pay attention, you reap the benefits of a credit score, free cash rewards, consumer protections, and better financial control.

If you want to know anyone’s true passion, look where they spend their money. That will tell you exactly what they value. The sooner you get comfortable with money, the sooner you can start earning free cash. Even – and especially – if you’re frugal!

Bottom line

This subject is near and dear to my heart. And it pains me to watch people paying with debit cards. I understand the “evils” of credit cards. But why say no to free money? If anything, use it as encouragement to manage your finances better.

Once you get comfortable earning rewards on one card and with your higher credit score, you’ll find things begin to flow more easily.

If you have to spend money anyway – which everyone does – get rewarded for it! Here are cards with no annual fee and others with cashback rewards. After a few months, you might be surprised at how much cashback you accumulate. Getting comfortable with credit is one of the best – and most rewarding – things you can do for your future.

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The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

About Harlan

Just a dude living in Memphis, traveling, and working toward financial independence.

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  1. Why might someone not want to use credit cards?

    Well, they might find a system that works for them using debit cards. If you’re accumulating wealth and reaching financial goals without credit cards, why fix what isn’t broken? There is also an argument for making things really, really simple for things (and having a bunch of credit cards you need to choose from for the correct multiplier isn’t simple, neither is churning or manufactured spend). Decision fatigue is an actual thing.

    If you’ve had problems in the past with credit cards… well, I can see that avoiding them is like avoiding alcohol if you have alcohol problems. “Hey, many people enjoy beer and wine, it’s just not for me.”

    Also, I don’t quite get this point:

    “I personally have internet, phone, Netflix, Spotify, insurance, electricity, and a couple of other services set to autopay. If those were randomly coming out of my checking account all month, I’d be a nervous wreck if my balance got low.”

    Someone who is responsibly adulting isn’t going to have a particularly low balance in their checking account handling bills, because making sure you have enough money in an account to cover regular, ongoing expenses isn’t that difficult (and the FIRE folks are all about emergency funds, adequate cash and so on)… and last I checked a credit card bill that takes a bunch of regular autopayments is, in fact, a bill that has to be regularly paid from SOMEWHERE… like a checking account?


    The reason why you can have 2% cash back is because other people screw up, and banks penalize those other people. Your success at getting cash back out of banks is based in no small part on other people’s misery.

    “Well, it’s not my problem”… but a lot of religions say things like we’re our brother’s keeper. Maybe people want to stay out of enabling an industry that’s not very nice to poor people.

    And you get some financial benefit by pushing credit cards to people, no? At least your prominent disclaimer seems to indicate this.

    I won’t say your points aren’t valid, because they are, but there’s some pretty sensible reasons where credit cards aren’t tools everyone wants to use, or should use for wealth accumulation.

    • “The reason why you can have 2% cash back is because other people screw up, and banks penalize those other people. Your success at getting cash back out of banks is based in no small part on other people’s misery.”

      No, this is a blatantly wrong conception. Bank makes money from credit card by transaction fee too, not by interest only. We get 2%, because credit card company charge the merchant more than 2% for each transaction. And the merchant will eat that fee, for the convenience of consumer, and for the volume of “accepting credit card” bring into the store.

  2. Keep in mind that just because poor people may pay more for credit, it is often because the bank knows that they can justify the fees, and if the ‘freeloaders’ weren’t claiming the rewards that they do, the banks would likely just make even more profit. I’ve seen people with 800+ FICO scores paying 6% or more for car loans because the lender said that was ‘the best that they could offer’ but other customers who learned to use credit would pay 1.9 or less, even if they had 650 scores.

    As for not having a lot in a checking account, with few exceptions, checking accounts aren’t where you want a lot of cash, but savings accounts, so savers have to minimize the days that they withdraw cash, and would want to delay paying bills interest-free so that their savings can earn as much as possible.

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