While everyone is feeling the pinch more than ever as we approach the holiday season, there are some things we can’t avoid spending money on. One way to make the spending a little less painful? Use a credit card that offers rewards! Here are just a few of the reasons it’s almost always a good idea to make a purchase with your credit card:
As mentioned before, unlike debit cards or cash, most credit cards will rack up rewards points on all purchases you make, with opportunities to earn even more in special categories. You can then use those rewards for cash back, gift cards, travel or other experiences, depending on the card.
Let’s say you have a card that earns you 1.5 points per dollar – spend $1000 in a month, and you’ll earn $180 a year with no effort at all. If you are already spending the money, why not pay yourself back?
Note, that doesn’t mean you should spend more than you normally would just to earn rewards. Only purchase what you can afford to pay off, as when you carry a balance on your card, the interest you’ll pay on it may eventually outweigh the value of your rewards. Additionally, be aware that, unlike regular purchases, interest charges on cash advances and balance transfers begin to accrue on the transaction date and can’t be avoided even if you pay off the card in full. If
In addition to rewards earned, many cards have perks such as roadside assistance, cell phone protection, and extended warranty protection on certain purchases. Read the fine print and find out what you qualify for!
They’re More Secure
If you’re carrying cash to make purchases, unfortunately there’s not much you can do if the cash goes missing. However, if your credit card is lost or stolen, you generally will not be held responsible for any fraudulent purchases. The key is to stay on top of suspicious activity before it gets out of control. Many credit cards offer an option to set spending limits and alerts by location and merchant type, so make sure to take advantage of this functionality if you have it.
It’s Easier to Track Your Spending
Because your credit card statement shows every vendor where you made a purchase, it’s easier to keep tabs on your spending habits. Additionally, many issuers automatically categorize purchases according to the merchant.
If you plan on applying for an auto loan or mortgage, a credit card is a good starter product to begin building your credit. By having a credit card that you pay the monthly balance of regularly, you’ll be improving your credit score.
Of course, there are a few instances in which using a credit card won’t help you save, such as when the transaction fee for a credit card is higher than the points you’ll earn, or if the purchase is so large (e.g., a wedding), you won’t be able to pay off the debt right away. In this instance, it might be more economically sound to use a competitively priced personal loan, with a lower APR (Annual Percentage Rate) than your credit card.
Do your research and find the card that fits your everyday lifestyle. Happy shopping!