It would be fun to rack up your credit card bill and go on a shopping spree, but that’s not what I’m advising. As long as you are responsible and pay off your balance each month, it can actually make smart financial sense to use your credit card for everything.
I use my Costco American Express credit card for everything. At 3% back for gas stations, 2% back at restaurants, 2% on travel purchases, and 1% on other purchases, not the cashback from purchases from Costco, that’s a lot of money you’re throwing away. Add in paying your electric, gas, and cable bills with your credit card you imagine how much each month you’ll rack up in rewards dollars, let alone over the course of a year. Don’t believe, take a look at what you currently spend each month on bills and spending money and do the math!
Your Credit Score is Important
Whether you’re just starting out and have no credit, or you’re looking to continue to build your credit due to mismanagement in the past, using your credit card responsibly by paying off the full balance each month will actually help your credit. A solid payment history is reported to credit bureau’s each month, whereas a debit card does not show on your credit report.
Whether it’s making a big money purchase, or simply do not want to carry cash around, credit cards are more universally accepted than even debit cards. Ever try to check into a hotel or rent a car with your credit card, a hold is placed on your checking account for incidentals, and that hold is even higher when using a debit card. Why tie up the money from your bank account when you can use your credit card and the hold will come off in a couple days from your credit account, which can take twice as long to come off with a debit card. Not to mention the rewards you’re getting by purchasing with your credit card…see…
If you find yourself enjoying the seemingly endless credit limit and are spending too much each month and cannot pay the full balance when it’s due, then perhaps going back to a budget with your debit card works better for you. If you’re disciplined though, and want to earn hundreds of extra dollars every couple months just by spending what you normally spend each month, but this time using your credit card, you can enjoy those rewards checks!