There are several good reasons to use credit cards. They save you money, they build your credit history, and they’re convenient.
Recently I became aware of one more reason to use credit cards. ATA Airlines announced last week that they are discontinuing operations. For customers that purchased tickets using a credit card, their homepage says:
“ATA customers who purchased tickets using a credit card should contact their credit card company or travel agency directly for information about how to obtain a refund for unused tickets.”
If contacting the travel agent or credit card company fails, a customer would also have the option of initiating a credit card chargeback.
Tougher Road to Hoe if You Bought a Ticket with Cash or Check
On the other hand, customers that purchased tickets using cash or check may only seek a refund by become a bankruptcy creditor:
“ATA currently is unable to provide refunds to customers who purchased tickets directly from ATA with cash or a check. These customers may be able to obtain a full or partial refund for their unused tickets by submitting a claim in ATA’s Chapter 11 proceedings. Information about submitting a claim will be available at the following website: http://www.bmcgroup.com/ataairlines.”
Conclusion
Let me think. Would I rather call my credit card company? Or would I rather figure out how to submit a claim to bankrupcty court, become a bankruptcy creditor, wait through the long bankruptcy process, and hope there’s enough money left for me after the senior debt gets paid? That’s a tough one.
Unless you have a dysfunctional relationship with credit, you ought to use credit cards.
Is it true that if no one used credit cards, the cost of consumer goods would decrease since businesses would no longer be charged fees by credit card companies? What is the premium we pay for enjoying the convenience of using credit cards?
Elton:
Great comment. I think credit cards probably slightly raise consumer prices. It seems the net effect is a transfer of wealth from those who don’t use reward cards to: 1) the credit card companies, and 2) people that use reward cards.
If I don’t use a rewards cards I feel like I’m subsidizing those people that do, not to mention the credit card companies.
It came up in Why You Should Use Credit Cards (Part 2 of 2).
Thanks for your comment.
Ah, yes. I missed part 2. My wife and I use credit cards for things we have to pay: bills, car registration, diapers, and gas for example. Everything else that is flexible on how much we can spend we buy with cash. It’s too easy to think we need something while we’re at the store. When we have to wait a month to put it into the budget, often we find out we didn’t need it. This method has saved us from $300-$400 per month. I realize we’re not getting the rewards payments and we’re not deferring our payments, but in the long run I think we’re going to come out ahead this way.
I use my credit card to pay for pretty much everything. Unfortunately, most of the utility bills in my area do not offer the pay by credit card option without a processing charge so I am not able to use my credit card to pay for bills. In regards to obtaining a refund from the airline due to cancelled tickets, you are also able to get insurance coverage if you paid by your credit card. I think that is very important as then I wouldn’t have to pay for a separate Traveler’s Insurance.
Allen:
I’m able to pay my cell phone, phone, and internet access bills by credit card.
I can’t pay electricity or water with credit card.
What insurance coverage do you get when you book an airline ticket by credit card? Life?
I always book car rentals with a credit card that provides insurance. It saved me a lot of time and money once when a semi tossed up a big rock that hit the hood of my rental.
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