TL;DR
Using a credit card exclusively for rewards can be beneficial if managed responsibly, but beware of overspending and potential fraud. Budgeting and discipline are essential to avoid turning a useful tool into a financial burden.
Story
“Free money?” I scoffed, recalling the 2008 housing crisis triggered by reckless lending. Sure, racking up credit card rewards seems tempting, but remember the subprime borrowers who thought they were getting a steal? They learned a harsh lesson when their adjustable-rate mortgages reset, and their “affordable” homes became financial burdens. Think of your credit card like a fire—useful when controlled, destructive when it spreads. Using a credit card exclusively seems like a good way to earn rewards, and it can be if you are disciplined. A credit card can be great for building credit history and offer purchase protection, but there are things you need to look out for. One major drawback to only using a credit card is you may not notice how much money you are spending. You might find that you spend more money using your credit card versus cash or debit. A 2001 MIT study demonstrated this, finding that people were willing to spend twice as much on tickets using credit card versus cash. Another possible drawback is the potential for fraud. If someone gets ahold of your information, they can cause a lot of havoc with your credit. Debit card protections are generally more substantial and simpler than credit card protections. Some stores charge extra for using a credit card, which would negate any rewards you earn. Budgeting and self-control are your allies in this game. Don’t let the lure of “free money” blind you to potential risks. Imagine playing with matches near a haystack—one slip-up can ignite a financial inferno. Track every penny, treat credit like a loaded weapon, and be mindful of the human tendency to overspend with plastic.
Advice
Treat credit cards with caution. While rewards are tempting, prioritize budgeting, spending awareness, and fraud prevention. Remember, a small spark can ignite a large financial fire.