If you use a credit card, you’re more like millionaires than you may think. Although most adults have credit cards, millionaires are even more likely to use them. According to the Federal Reserve, almost all adults with incomes over $100,000 have a credit card in their name.
But if millionaires are so wealthy, why do they rely on credit? Credit cards provide plenty of benefits, even for the super-rich. And you can take advantage of those benefits too, even if you don’t have a seven-figure net worth.
Reasons why millionaires use credit cards
Millionaires use credit cards thanks to the convenience and perks they provide. These are some of the key benefits of using a credit card — even for people who can easily afford any purchase in cash:
1. They earn valuable rewards
Millionaires earn valuable rewards by using credit cards for purchases, from paying for groceries to buying clothing. For example, some cards offer 5% cash back on certain purchases, or you could earn points or airline miles that can be redeemed for gift cards or travel.
Although your income doesn’t directly impact your credit, it’s no surprise that those with high incomes tend to have higher credit scores. With a higher income, they’re more easily able to pay down debt and make payments on time, boosting their scores. In general, millionaires tend to have very good to excellent credit.
As a result, millionaires benefit from their credit scores in the form of credit card rewards. In a 2023 study on credit card rewards, the Federal Reserve reported that individuals with high FICO credit scores tended to earn money with rewards. Even after accounting for credit card fees, they usually came out ahead. By contrast, those with low credit scores typically lost money.
2. They get insurance coverage
Millionaires use credit cards because many credit cards automatically give you added protection and coverage. For example, with some cards, you’ll get the following protections:
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Auto rental collision coverage: If you use your card to pay for the cost of renting a vehicle, your card’s auto rental insurance automatically protects you against damages or theft.
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Travel interruption insurance: Book your travel with your card and you may be covered if your trip is canceled or interrupted for a covered reason, such as a hurricane or death in the family.
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Cell phone protection: Pay for your phone service with your card, and you may be eligible for cell phone protection. This form of insurance covers your phone against damage or theft.
3. They enjoy travel perks
Despite their incomes, millionaires still face some of the same annoyances or stressors while traveling, such as long lines at the airport. By using a credit card to book your travel, they can make the experience less stressful by utilizing the following perks:
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TSA PreCheck or Global Entry fee credits: If you pay for TSA PreCheck or Global Entry application fees with your card, you could get a statement credit to cover the fee. Once approved, your membership in these programs can streamline the airport security process and allow you to get through security faster.
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Airport lounge access: Some credit cards include airport lounge access as a perk. At these lounges, you can enjoy snacks, drinks, complimentary WiFi and other amenities.
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Travel concierge: Credit card concierges can assist you if you need help booking reservations or finding a good hotel. They can even help you secure event tickets, refer medical or legal services, and assist with other emergencies.
4. Their purchases are protected
Millionaires want to ensure that their purchases, from new handbags to the latest tablet, are protected. By using their credit card for their purchases, their purchases are automatically protected with the following benefits:
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Extended warranty: On eligible purchases with warranties, extended warranty protection extends the manufacturer warranty by one year or more.
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Purchase protection: Purchase protection applies to eligible purchases that are damaged or stolen within a few months of the purchase date. This benefit reimburses you for the cost of the item.
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Return reimbursement: If you want to return an item and the retailer declines, return reimbursement is a benefit that refunds you for the cost.
5. They’re not liable for fraudulent charges
One of the reasons why millionaires use credit cards rather than cash or debit is because of the protection against fraud they provide. If a credit card is lost or stolen, your maximum liability for unauthorized purchases is $50.
By contrast — depending on how quickly you report the charges — you may be responsible for the entire amount of unauthorized transactions with a debit card.
6. It’s easier to track their spending
Tracking spending with cash can be difficult. Tax season can be especially challenging unless you keep diligent records and store your receipts.
With credit cards, you can sync your accounts with your favorite budgeting or bookkeeping software. You can quickly view your records to see how you’ve historically spent money in the past, trends in your spending habits, and even look up specific transactions from the past. These records can make finding your charitable donations, medical expenses, and other potential deductions easier at tax time.
7. It minimizes the need for cash or checks
Credit cards are often much more convenient than cash or paper checks. You don’t have to worry about stopping at an ATM to make a withdrawal, and you can add your credit card to your phone to make contactless or mobile payments.
This article was edited by Rebecca McCracken
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn’t include all currently available offers.