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Why You Should Use a Credit Card for Every Purchase

Now while I understand that promoting the use of credit cards could create more harm than good for those that cannot handle the responsibility of a credit card.  After all, there is virtually no stopping you from spending, until you hit your credit limit, I suppose, and for any statement balance that carries over to the next month you will begin to be charged interest.  Continuing to rack up interest and not paying off the full balance can just lead down a destructive pattern of debt.  If used correctly and responsibly, there can be plenty of reasons to not only use a credit card but replace cash and debit and use for every purchase that you make.  Missing out on these great opportunities could do harm for your credit and your wallet.

Builds Up Credit

If you have ever applied for a mortgage, loan, or your first credit card, you know that the social security number you fill in to pull your credit, that score will not only determine what your interest rate will be, but if you are even approved at all.  Since the interest rate will decide your monthly payment, the better the credit score the lower the interest rate, and the less you pay each month.  By making on-time payments every month and paying off your statement balance to keep your utilization low, you can be sure that your credit will continue to build up and your score will rise over time.

Easy to Track

When trying to put together a budget it can be difficult to see exactly what you’re spending, especially if they money going out is in the form of cash, debit, and credit.  By using a credit card for every purchase, you can have all charges on the same statement, making it easy to go line by line to see every dollar that goes out.  From there, you’ll be able to tell how much is spent in each area, such as monthly bills, food, gas, and entertainment, and where you will need to make cuts.  If you notice some areas are higher than they should be, you can start to examine every charge going forward with hopes to reduce spending.

Grace Period to Pay

When using cash or debit, the money leaves your account right away, but with a credit card you can charge during the month and do not have to pay back until the following month after the statement has come in the mail, giving you an extra paycheck or two to make sure you have the available funds to pay off the entire statement balance.  This is where you will have to be careful though to not overspend, otherwise you could be in for a shock when the bill comes in.

Fraud Protection

These days you just never know who access to your information can have, whether it’s stolen by copying your credit card, or being part of a retailer’s breach, where information is leaked, but at least with a credit card you can easily dispute any fraudulent charges and you will not have to be held accountable.  You can do the same with a debit, but the funds would have already left your account, so the money would go missing until you’re able to get back, which who knows how long that could take.

The Rewards Add Up

The best part about using a credit card for all purchase has to do with the rewards that add up.  By charging on your account, you can earn points or even cashback just by making the purchases you would made anyways, so continuing to use a debit or credit card without rewards could be allowing you to miss out on hundreds of free dollars a year, depending on how much you spend.  Just be careful not to overcharge on unnecessary items just to earn points, as the balance rises you may have difficulties paying back and carrying over a balance and paying interest could outweigh any rewards you would have earned, paying more in interest.

Hidden Perks

When you do select the credit card that is best for you, don’t forget to check out the hidden perks that you may not even realize exist.  Most credit cards will cover rental car insurance if you use the card to book, so that way you can decline the coverage at the rental counter and take advantage of the free coverage on the credit card that you were going to use to book anyways.

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