With the amount of credit card offers that come in the mail, probably on a daily basis, you really have your pick at which card that you select. Ignore the name of the card when they throw in “black”, “platinum”, or “diamond” on there, it hardly means anything, especially if there is an annual fee. What you really should focus on is the APR, which dictates the amount of interest you pay if you carry a balance over, which depending on the balance, could add up pretty quickly, and rewards, which we’ll get into in a little bit. Either way, using a credit card for all purchases can actually make great financial sense, you just have to watch out how much you charge so that you can pay off the full statement balance by the due date.
The Rewards Add Up
Starting out with a bang, is really the reason I use a credit card for all purchases the most, which is the rewards. By making charges, you can earn airline miles, points that you can redeem for gift cards, or even a check back once a year with your cashback dollars, it all depends on the card, so find the one that best suits you. It can be easy to start charging when you see the rewards add up, so just watch the spending, otherwise you’ll want to buy everything just for the rewards.
I personally have gotten hit twice in the past year, once with a debit card, and once with a credit card, and it was enough to never use my debit card again. Whether it was skimming at the gas pump, someone sees your card when it’s out paying a tab, or an even larger store has their information compromised, fraud can happen anytime, and you never know what the charges will be, so why risk your bank account losing out on the money while it’s disputed, and at least with a credit card, you will not have to worry about getting the money back.
While it’s true that carrying a balance will not help your credit score, or your wallet for that matter when you’re paying interest, using the credit card and paying off on a regular basis can improve your credit score as a solid payment history. As you continue to pay off your account you can be offered a credit line increase, which can also help your credit score by increasing your available credit, while decreasing your total credit utilization, if you have a balance on other cards. Either way, it can’t hurt to accept an increase, unless that extra room will temp you to charge more.
Ease of Booking Reservations
Sure, you can use a debit card to book reservations, but when you go to check in when you have to give a card at the desk for incidentals, and if you give your debit card, they can place a large hold on the account in case there are any damages. Same goes with booking a rental car. If you use your credit card, it doesn’t matter if there is a hold or not, you will not have to worry about the funds leaving your bank account, and by the time your statement balance is due, the hold will be gone.
Easy to Track Spending
Since a credit card virtually has an endless amount of available credit, you can be tempted go on a spending spree, and there really isn’t a stop until you get the statement balance, which hopefully you can pay the full balance. In order to free up extra money each month to fund your emergency account, keep you out of debt, and save for your future, you can track spending to reduce unnecessary spending. By taking last month’s credit card statement, all your charges will be in one place where you can go line by line and dissect each charge and see what was a necessary monthly expense, and what probably could be avoided. Just for fun, add up those charges that could be avoided and see what that adds up to. If you factor in going out to eat as unnecessary, you should save hundreds of dollars a month.
Additional Perks You May Not Even Realize
In addition to all of the other great perks, something you may not know you have in your credit card contract is rental car coverage, which will help if there is any damage made, while you decline coverage from the company.