Why Using a Credit Card for All Purchases Makes Sense

Growing up I was always under the impression that credit cards were bad, like you didn’t have the money to make the purchase so you put it on a credit card.  While that may be true for others, that is not a reason to abolish credit cards all together.  Sure, it does take discipline to make sure you don’t go on a spending spree, let alone paying the full statement balance by the due date otherwise you will start to get charged interest, but if used correctly, credit cards can make great financial sense.

Fraud Protection

You hear about fraud all the time now, whether it’s getting your card skimmed at the gas pump, have a picture taken quickly when your card is out when you’re paying the bill, or part of a large compromise from a department store or restaurant.  Either way, if that happens, you don’t want bogus charges to come out of your bank account with a debit card, with funds gone until who knows when you can get them back.  With a credit card, at least the charges will be disputed and you will not have to be responsible for them at any time.

Ease of Booking

Sure, you can use a debit card just about everywhere, but when it comes to booking a hotel or rental car with a debit card, they are likely to put a huge hold on your account for damages, so you need to make sure you have enough in the account to cover, not to mention you don’t know when the hold will be removed, of which it could take up to a week.  With a credit card you don’t have to worry even if there is a hold as that will come off by the time you owe anything on the card.

Builds Credit

While carrying a balance certainly will not improve your credit score, as debt will take away from your available credit and increase your credit utilization, which will in turn lower your credit score, but that doesn’t mean that using a card is all bad.  By continuing to use and pay every month you will be continuing a solid payment history which will help your score, not to mention by using responsibility you can get credit line increases, which will increase your overall available credit and increase your credit utilization, while even improving your score in the meantime.

Rewards

Last, but certainly not least, is the best reason to use a credit card for every purchase and that is based on the rewards.  By making purchases you can earn airline miles, points, or even cashback dollars, so not using the card would be leaving free money on the table just by making the purchases that you were going to make anyways.  It can be tempting once you see the rewards start to add up to charge just for the rewards, but it’s important to stay on budget, otherwise the credit card interest you’re paying will far exceed the rewards.