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Use a Credit Card for All Purchases?

Credit card debt can be a scary financial situation to get yourself into, one that could take years to get out of.  That’s why it’s important that if you are using a credit card, that you charge what you can afford.  Then paying the entire statement balance by the due date will help keep you from paying interest and carrying over a balance month to month. That being said, if you can use a credit card responsibly, they can actually make financial sense to use, enough that it could be argued to be used for every purchase.

Builds Credit Score

First, you know that if you’re applied for just about anything that involves financing such as an auto lease, mortgage, and credit cards, you know that your credit score is a large basis for approval, and well, denial. By charging on your credit card and paying off the balance each month, you will not only show the lender that you are a responsible borrower, but your credit limit will continue to increase, as well as your credit score. This reward for responsible borrowing will help you get the best interest rates on the market, saving you the most money over time.

Can Earn Free Money

Next, my favorite aspect of using a credit card is for the rewards. By swiping your card, you can earn points or even cashback that can add up to hundreds of dollars a year depending on how much you’re charging each month. If you stick to charging your normal purchases, you’re now earning free money that you were previously missing out on. Just be careful not to get too wrapped up in seeing the points balance rise, otherwise you’ll start putting unnecessary charges on there and if you can’t pay off the full statement, the interest you’re charge will outweigh any points.

Provides Fraud Protection

You can never be too careful these days when it comes to protecting your accounts. By having your card information stolen at the gas pump or even when you leave your card out to pay the bill at a restaurant or bar, almost immediately you can receive fraudulent charges show up on your account. While sure, using your debit card you can dispute and get the money returned to you, but not before your checking account has been cleaned out. This way, using a credit card you can dispute the charges and you won’t have to worry about being charged until the funds are back.

Great Way to Track Expenses

Last, it’s always a good idea to simplify your finances so you can easily see all charges on one statement. This way you can go line by line and single out the unnecessary charges so you can hopefully tighten up spending a bit. By limiting going out to eat, or making sacrifices such as cutting the cable cord, you can see how much you’re saving on spending each month and hopefully seeing a lift in your emergency fund savings or being able to contribute more towards retirement.

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