When we read about credit cards, we often hear about the pitfalls and problems. There are plenty of dire warnings about credit cards — but that doesn’t mean I don’t use my credit card for as much as possible.
Credit cards aren’t all bad. In fact, they can be great financial tools. If you use your credit cards responsibly and as part of your regular financial plan, they can provide you with a solid array of perks.
Here are four reasons I use my credit card to pay for everything:
With credit card rewards programs, you can earn travel, merchandise, and even cash back.
I like using an airline miles card for most of my purchases. I even pay my rent each month with an automatic charge to my credit card. Just from my rent alone, it’s enough for a one-way airline ticket to just about anywhere in the United States.
By putting groceries, gas, and recurring expenses on my credit cards, I rack up the rewards. This reduces my overall costs when I redeem them.
Depending on your rewards program and how you use your credit cards, it’s possible to see a value of more than $1,000 a year, just by using your credit card to buy things you would purchase every day anyway.
2. Manage my cash flow
Sometimes you need a little help managing your cash flow. One of the reasons I love using my credit card is that it ensures that the money in my bank account is readily available. By putting all my bills on the credit card, I know that I have money freed up in my bank account for other purposes.
This was especially important when my monthly income varied. For years as a freelancer, I didn’t know exactly how much money I would make each month. If a client paid late, things could get tricky if I relied solely on my checking account.
Using credit cards can smooth your cash flow. You pay your bills with a credit card, and then you pay off your credit card each month when you know the money is there. Using credit cards can give you more control over when and how you pay for necessities.
There’s no way around it: A credit card is convenient. No carrying around bulky cash — instead, you just swipe one piece of plastic.
In fact, thanks to digital wallets, you might not need to swipe for much longer. Many stores are adopting technology that allows shoppers to use a smartphone to pay.
I also find credit cards are convenient when I travel. None of the cards I carry charge foreign transaction fees, so that means I can take advantage of the ease of paying while in another country.
Depending on where you go, it can be easy to simply swipe your US credit card and the currency conversion is automatically made — no need for a lot of foreign cash.
Credit cards come with their own protections. You aren’t liable for fraudulent charges made with your credit card, so you can avoid serious problems of that nature in the event your card or your account number is lost or stolen.
Even though your debit card comes with similar protection, the reality is that if someone steals your debit card and uses it, that’s still your money they’ve taken. You don’t have access to it until the situation is cleared up and it’s put back into your account.
A credit card is someone else’s money. They are on the hook from beginning to end when it comes to fraudulent charges.
There are other protective perks that come with some credit cards as well:
- Extended warranty that adds on to the manufacturer’s warranty.
- Price protection that allows you to recover the difference if you buy something and it goes on sale later.
- Extended returns. In some cases, even if the store won’t allow you to return an item, the credit card will reimburse you.
- Certain insurance protection for rental cars, lost baggage, and even trip cancellation.
Every credit card is different, so check your membership benefits to find out what to expect in terms of protection.
Make it part of your plan
In order to effectively use your credit card to pay for everything, you need to be disciplined and have a plan. If you aren’t careful, it’s easy to overspend and find yourself deep in high-interest debt.
Before you start using your credit card to pay for everything, create a spending plan that works for you. Never make a purchase just to get the points. You should always have a purpose, such as paying your phone bill, buying groceries, or fueling your car. Only use your credit card on planned purchases you can afford.
Every month, pay off your balance. Don’t charge more than you know you can pay for in a month. When you carry a balance at 15.99%, that outweighs even the highest 5% cash back rewards. You render all of your rewards, perks, and protections moot when you carry a balance — especially if you carry it for more than a couple of months.
With the right approach, it’s possible to use your credit card for every purchase and come out ahead. View your credit card as a tool and avoid getting into debt, and you might be surprised at the financial benefits.
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