Credit cards used to have a bad reputation, at least the way I always saw it, that you only used a credit card when you didn’t have the money to pull from your bank account. While that may be true for some that find themselves neck deep in debt, but actually using a credit card makes great financial sense and hopefully the stereotypes will go away so that the credit card can reign supreme over the rest when it comes to ways to spend.
As my card was compromised again last week, I’m so glad I made the decision a year ago to put away my debit card and only use my credit card for all purchases. See, when your debit card is compromised you could risk your bank account being wiped out, and remain out until you are able to receive the funds back from the bank, which who knows how long that could take. At least with a credit card you don’t have to worry about losing money while you wait for the fraudulent charges in limbo until they’re cleared out, and you can ignore when you go to make the statement payment.
Rewards are Key
In addition to the fraud protection, rewards are also the reason why I make all purchases with the credit card now, because it allows me to earn 1-4% cashback on purchases that I would normally make anyways. Last year I earned a check for over $700, so quite a bit of free money just for using my credit card on spending. There are so many cards out there, some offer point that you can redeem into gift cards, others cashback, so it’s important to find the best one out there to maximize savings.
Avoid a Hold that Could Drain Bank Account
While you can use a debit card to book a hotel room or rental car, but the problem is, the company you are renting from will issue a hold on the card for a few hundred dollars that could take even a week or two to come back into your bank account, even after you check out. If you use a credit card, same for as fraudulent charges, you don’t have to wait for the funds to come back, they will just stay pending until they are resolved and removed from your account without being financially responsible for the charges.
Have to Stay Disciplined
Now while there are a few reasons that actually make great financial sense to use your credit card for all purchases, there is still one major behavior to keep in mind. You need to stay disciplined and don’t go on a spending spree on items that you cannot afford just because of the rewards. Remember you still have to pay the full statement balance by the due date, otherwise you start to get charged interest, which will far exceed any cashback rewards that you get by charging up your account. If you stick to your normal, necessary purchases, you will be in good shape to reap the benefits of a credit card.