I never use cash. I never use debit. And as a whippersnapper Millennial, I definitely don’t use checks. I charge just about everything on my credit cards, anywhere I can. Even for the smallest purchases like the bottled green tea at work. It costs $1.42 and the kiosk takes credit. Perfect.
You might wonder why I would do such a thing, when so many view spending on plastic as a modern-day evil, and an easy way to get oneself deep into debt. Well, I disagree with that sentiment. What matters is using your cards responsibly and in the right way. Here are my reasons for why I use credit cards for everything and why you should maybe consider it, too.
1. It Builds Up Your Credit Score
I have used credit cards on everything for years now (since college), and because of that I’ve been able to build a solid credit score. Because of this, I was able to get my own mortgage loan at 22, my own auto loan this year at 26, and I have some of the very lowest interest rates. I’ve never needed to put down a security deposit on a loan or credit card, and I’ve never had to worry about not qualifying for a loan.
Using a credit card is one of the easiest ways to start building your credit. The key is to never overcharge them or spend beyond your ability to pay off the bill in full each month. Stick to the 10 percent rule. That is, don’t use more than 10 percent of the maximum credit limit on each of your individual cards. This keeps your utilization ratio low, a key factor in calculating your credit score.
2. It Saves Me Time
I don’t ever have to go the ATM to get cash. I don’t have to dig through my wallet to find cash or change at the store. Literally, all I need to do is swipe or dip my credit card at the register and I can go about the rest of my day.
Automatic payments on credit are also great. Of course I still track my payments and pay attention to them, but having them automatically be paid without me needing to individually write out a check or fill out an online form is a great time saver. If you have the right rewards credit card, you can even get credit card rewards on your bills!
3. It Makes Accounting Easy
I use the online banking features for all of my credit cards (I currently have three). While I still keep receipts and track my itemized expenditures separately, having access to all my monthly spending in an automatic online statement is pretty handy. I can categorize and track my spending and double check all my receipts for accuracy. When using cash, it’s easy to lose track of where your money is flowing if you don’t keep a consistent paper trail.
Each of my card issuers also have mobile apps. This allows me to track my expenditures on the go and allows me to get alerts wherever I am.
4. It’s More Secure
Carrying a lot of cash around isn’t safe. And though debit cards offer similar conveniences and technical safety features as credit cards, they won’t protect you as well should you become a victim of identity fraud. Debit cards are a direct access to your checking accounts. If someone gets access to your debit card’s information, they can wipe out the cash in your account completely. And maybe you can dispute the transaction with your bank and get your money back, but this isn’t always guaranteed and may take some time to process, leaving you effectively penniless until the issue is fixed.
With credit cards, there’s a barrier between a potential thief and your actual personal funds. It’s easier to dispute a transaction on your card, many issuers may auto freeze your card when there is suspicious activity protecting you from further fraud, and you can recover much quicker from fraudulent credit card activity.
5. Rewards, Rewards, Rewards
Who doesn’t like saving money? Utilizing credit card reward systems are a super easy way to save money. All three of my credit cards are cash back rewards cards: the Chase Freedom® card, BankAmericardCash Rewards™ card, and the Citi® Double Cash card. And, I’m currently looking to get one more, the Discover it® card. Chase has recently updated the Chase Freedom® card to its new Chase Freedom UnlimitedSM card, which offers an even better rewards program than before! Each of these cards offer a slightly different way to earn cash back on purchases, and by using them at the optimal time for the right purchases, I can save a significant amount of money every month. This takes very little work on my part as I’m getting discounts on expenditures I would make anyway. Definitely easier and faster than couponing.
One to five percent cash back on purchases may not seem like much, but that amount on EVERY purchase I make adds up to a lot of money real fast. And with these cash back reward cards, there are sometimes special retailer deals and additional cash bonuses for online retailer purchases. Taking advantage of cash back reward cards can actually shave a significant amount off your budget each month.
So, What Don’t I Put on My Credit Card?
Okay, so there are exceptions to every rule. Aside from the purchases I make at places that won’t accept credit (which is really rare) or places that require a minimum purchase amount before accepting credit, there are some things that I don’t put on credit. Mostly, I don’t make large purchases on credit that would require me to revolve my credit. This is not only an easy way to potentially get trapped in credit card debt should there bean unexpected cash flow problem, it would require me to pay high interest fees if I’m not in the card’s introductory 0% APR period. Carrying credit card debt also has a negative effect on your credit score. For these large purchases, I generally save up and prefer to pay in full.
Check out this article on 5 things you should never put on a credit card for more things to not charge on credit. As mentioned earlier, the key to responsibly using credit is to never overcharge your credit cards or spend beyond your ability to pay off the bill in full each month. Keep a spending plan and a rock-solid budget planned out ahead of time.
Disclosure: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site maybe compensated through the credit card issuer Affiliate Program.