credit cards

When You Should Always Use Your Credit Card

credit cardSome people preach that you should only use your credit card in times of emergencies and only out of necessity because it helps avoid temptation.  Always carrying your credit card in your wallet can lead to overspending and it’s a habit that can result in thousands of dollars in debt.  Those people have a valid point.

I think the exact opposite is true.  I don’t think that people should get into the habit of always using their credit card for every single purchase because if you don’t keep track of spending the outstanding credit card balance can get out of hand.

However I do believe in using your credit card to take advantage of everything it has to offer.  The credit card company is taking advantage of us by charging interest, and possibly an annual fee, so why not take advantage of them too.  That way it’s an equally beneficial relationship.

Here are four times to always use your credit card:

Keep a good credit score

It’s no secret that having a credit card, spending within a limit and paying it off in full every month helps increase and maintain a good credit score.  Your purchase and payment history is reported to the credit bureaus every month so the more you use your credit card the better score you’ll have.

That’s only true if you use your credit card responsibly.  If you keep the outstanding balance less than half of the total credit limit and you make at least the minimum monthly payment on time your credit score will be good and even increase.  Of course making more than the minimum monthly payment is better because then you pay off the balance quicker and save on interest charges.

Take advantage of travel perks

Popular personal finance website Wise Bread says that travel perks are a major advantage of selecting the right credit card.  If you like to travel or travel often make sure you’re reaping the rewards every time you swipe the credit card.

“Since I started to charge all expenses to my credit cards, I have collected and redeemed miles for everything from fancy dinners to sports gear, to multiple flights all around the world. Hey — just for spending money I would always have spent, I’ve been able to take advantage of all sorts of free swag. What’s better than free?”

Other travel perks include out of country travel medical insurance as well as flight delay and trip interruption along with baggage loss or delay insurance.

Extended manufacturer’s guarantee

This is a huge benefit of using your credit card.  If you make purchases with your credit card (usually gold or platinum) you automatically receive an extended warranty (usually one year) on top of the standard warranty that comes with the item.  This is great for big ticket items such as electronics and sports equipment.

Last year when our rental car was broken into after shopping at Best Buy, American Express covered all the damages to the car because they offer renter’s insurance as well as refunded the cost to replace our items because the card also offered purchase protection insurance.  That’s a fantastic perk.  Be sure to check the extended warranties and insurance coverage when choosing your next credit card.

Don’t want to carry cash

A lot of people don’t like carrying cash – and more importantly getting change.  I’m a woman and I carry a wallet and let me tell you that the amount of change I get in a day significantly increases the weight of the wallet.

I personally don’t like carrying cash because I can’t keep track of my spending and because I don’t want to lose money if I ever get robbed.  I would much rather swipe my credit card because it’s a more convenient payment method.  With that being said not carrying cash also stops me from making purchases because I’m afraid to swipe my credit card (remember I used to be in $50k of debt) and rack up a huge credit card bill.

What’s your favorite reason to use your credit card?

 

 

 

About the author

TK

TK is a Certified Financial Planner with over 15 years of experience in the banking industry. She started blogging in 2009 after the market crash. TK enjoys helping people plan their retirement, pay off debt, invest wisely, live on a budget and enjoy happy financial lives. You can see what she's up to on Twitter @TahnyaKristina.

1 Comment

  • We use our cards for a majority of our purchases. We pay them off every month, and all of our cards are cash back rewards cards, so it’s basically getting money back for spending we’d do anyway. It adds up!

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