Why Nearly Every Purchase Should Be on a Credit Card

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The reason nearly every purchase should Be on a Credit Card
Credit cards are safe and convenient, they help build credit, simplify budgeting, and they are rewarded with rewards. No, you do not have to enter the debt trap, and you do not have to pay interest.
By Virginia C. McGuire Virginia McGuire was previously a credit cards journalist for NerdWallet. She is journalist with experience covering personal finance as well as real estate, business as well as architecture and design. Her work has been published in the Philadelphia Inquirer, The New York Times, The Awl and Mental Floss.




as well as Paul Soucy Lead Assigning Editor Credit cards, credit scoring and personal financial planning Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He was an editor with USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for more than 20 years. He also built a successful freelance editing and writing practice with a focus on business and personal finance. He was editor of the USA Today Weekly International Edition for six years and received the highest award from ACES: The Society for Editing. He holds a bachelor's in journalism and a Master of Business Administration. His home is in Des Moines, Iowa, with his fiancée, his two sons, as well as a dog named Sam.





Nov 3, 2022


Editor: Paul Soucy Lead Assigning Editor Credit cards, credit scoring personal financial planning Paul Soucy leads the credit cards content team at NerdWallet. He was editor at the Des Moines Register, USA Today and Meredith/Better Homes and Gardens for more than 20 years. He later establishing a successful freelance writing and editing business. The editor of the USA Today Weekly International Edition and was awarded the top distinction from ACES: The Society for Editing. He has a bachelor's degree in journalism, as well as a master of Business Administration.







A majority of the products featured here are provided by our partners, who pay us. This affects the products we write about and where and how the product appears on a page. However, this doesn't influence our evaluations. Our opinions are entirely our own. Here's a list and .



Cash used to be king. People paid for everyday purchases with cash or with checks (which can be used in a similar way to cash) and saved credit cards for big and frequent purchases -- If they even had credit cards. Today, the credit card is accepted virtually everywhere, and some people don't even carry cash.
In general, NerdWallet suggests whenever it's possible:
Credit cards are safer to carry than cash and offer stronger fraud protections than debit cards.
You can reap significant rewards without changing your spending habits.
It's easier to monitor your spending .
Responsible credit card use is among the easiest and fastest ways to build credit .

Credit cards are a great way to spend money . Spend money as you normally would, then pay the balance in full each month, and you'll reap the advantages of credit cards, without being in debt or paying an interest fee.
The top credit cards for 2023.
Cash back and 0% APR transfers of your balance -- shop our Best-Of Awards to see the year's top credit cards.






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Credit cards are safer to carry and use
When you loose your wallet or are taken hostage, the money that you had in your wallet is almost certainly gone forever. If thieves go on a spending spree with your credit cards, however there is a chance that you won't be held accountable for any fraudulent purchases. It might take a while to clean up the mess, but you'll never lose any of your money.
Debit cards, too, pose a risk. If your credit card is misused the issuer of the card who loses the money. If your debit card has been misused, . Assuming you report the fraud immediately and you report it to the authorities, you'll be able to get your money backat some point. It could be a while until you are able to sort things out. During that time there is a chance that checks will bounce. automatic payments might be denied because of insufficient funds and you may have difficulty paying the cost of your expenses.
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Credit cards earn easy reward points
Credit card rewards motivate customers to make use of their credit card and are extremely persuasive. With a basic flat-rate card that charges the same amount on each purchase, you'll get back 1.5 percent, or even percent of each dollar you spend in cash, points or miles that you can redeem to pay for travel or other purchases. Spend $1,000 per month and you can earn between $180 and $240 per year, without any effort.
Other cards offer greater rewards for specific spending categories, like groceries, gas or restaurants. Combine a handful of cards, and you'll boost your rewards significantly.
As an example, suppose the family has four cash-back credit cardsthe, the and . By strategically using them, the family could earn hundreds of dollars a year from cash back
Spending



Rewards rate



Reward points for each year



Groceries


$400 a month


6%


$288


Restaurants


$150 a month


* 5% for 3 months
* 3.3% for nine months


$81


Gas


$100 per month


* 5% for six months
* 3% for six months


$48


Amazon.com


$100 per month


* 5 % for six months
* 2.2% for six months


$42


Streaming media


$50 per month


6%


$36


Travel


$1,000 / year


5%


$50


Everything else


$1,000 / month


2%


$240


TOTAL


$785








Find out how rewards are earned

Groceries
The Blue Cash Preferred(r) Card from American Express earns 6% cash back on up $6,000 a year in spending at U.S. supermarkets, then 1percent (terms are applicable -- check ).

Restaurants
For three months: The It(r) Cash Back program for three months: it(r) Cash Back earns 5 percent cash back the amount of up to $1,500 when you spend in categories you choose to activate, as well as 1% on other purchases. In 2020, restaurants was a 5% category for a quarter.
For nine months, the Chase Freedom Flex(sm) earns cash-back of 3% at restaurants.

Gas
Three months in a row: The Chase Freedom Flex(sm) earns you 5 percent cash back on up to $1500 of spending in categories for quarterly that you choose to activate. In 2020, Chase offered gas station as a category with 5% during three months.
Three months in a row: In 2020 it(r) Cash Back was a part of the It(r) Cash Back program was introduced. it(r) cash Back had gas stations as an 5% category for three months.
For six months: Blue Cash Preferred(r) Card of American Express earns 3% cash back at U.S. gas stations (terms apply).

Amazon.com
For six months: 2020 Chase and Discover had Amazon.com as an 5% category for three months each.
The card is valid for six months. The Citi(r) Double Cash Card earns you 2% cash back on all purchases . You earn 1cent when you purchase and 1% when you pay it off.

Media streaming
The Blue Cash Preferred(r) Card from American Express earns 6% cash back on selected U.S, streaming services (terms apply).

Travel
The Chase Freedom Flex(sm) gives you 5% cash back on travel made through Chase.

Everything else
Use the Citi(r) Double Cash Card and earn 2% cashback.








One word of advice, be sure to not spend more than you normally would just to get extra rewards. A little cash back will not make up for the additional $100 at the supermarket shop or that additional $250 worth of clothing. If you carry an unpaid balance from month to month and pay interest, it can more than eat up the value of your reward and you should pay it all in full whenever you can.
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Credit cards help you track the amount you spend
Monitoring your budget can be difficult no matter how much you spend it. However, finding out where money went is particularly difficult. You can lose receipts, and there's often no other record of how much you spent and where your money was spent. Checks? You've missed registering one in your check register, and you'll have keep waiting for the beneficiary to cash it before you can trace it (and some people are notorious for keeping checkbooks for several months).
With credit cards, everything shows up on your account in near real-time. Further some issuers automatically classify purchases according to the merchant:
Purchases on the Chase credit card are categorized by categories.

Most major issuers also offer reports that allow you to determine how much you've spent across various categories in a given month, or for the entire year or over a certain time that you define:
Spending report on the Chase credit card.

If you use a budgeting application like Mint or You Need a Budget, you can import data from your bank and credit card accounts. It's easy to fit each purchase into a budget category and see where you're overspending and areas where you could stand to indulge a bit.
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Credit cards aid in building credit
There is no requirement to use an account with a credit card in order to enjoy good credit, and certainly you don't need to keep the balance. However, judicious usage of a credit card is the most effective way to improve your credit scores and opens up many opportunities. It is easy to get homes, whether a prospective landlord checks your credit before giving you keys or seeking a loan to buy a home. Cell phone companies, insurance agents, and utility companies might use your credit history for determining eligibility and even your rates. It could even increase the chances of getting a job, as numerous employers conduct credit checks on job applicants.
If you have a credit card, making frequent small purchases and keeping your balances at a minimum and paying your bills punctually will boost your credit score in the long run.
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When not to make use of a credit card
If you'll need to pay an extra fee The merchant pays processing fees every time you use a credit card. Most of the time, those costs are rolled into costs of the merchants, as is any other expense of running a business. Sometimes, however, a retailer may charge the customer directly, by adding an upfront surcharge as well as a "convenience fee" for using your credit card. In these instances it's likely that you'll need to pay with a different method, unless your rewards on credit cards are enough to cancel out the cost of the surcharge.
When you don't want the merchant to be charged a fee Also, you might prefer not to use credit cards for smaller merchants that you would like to help. They may be happy if you pay in cash or via check, as they don't have to pay processing fees. Debit cards are more advantageous than credit cards offered by merchants' standpoint, because the processing charges for debit cards are likely to be less than the amount they'd be charged for a credit-card transaction.
When you don't want to spend too much: Some people struggle to keep their spending in check when they use credit cards. That five-figure credit card limit might make it hard to remember the reason you shouldn't spend your money on that expensive object. If you're close to your credit limit or you're worried about running up an excessive credit card balance it's possible to reach for your debit card, or even cash.
There are a lot of great benefits for customers of credit cards. Find out the best one for you. Just make sure you're able to make wise spending decisions, regardless of the method of payment you choose.
>> MORE:
To see rates and fees of the Blue Cash Preferred(r) Card offered by American Express , see .




About the authors: Virginia C. McGuire was a former credit card writer for NerdWallet.


Paul Soucy is the lead credit card editor at NerdWallet. He has previously worked for USA Today and the Des Moines Register and holds an MBA.







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