Why I Use My Credit Card For Almost Everything – 3 Big Reasons

If you follow Dave Ramsey or any credit card opponents, you’ve probably heard of the claims about how credit cards are pretty much the devil’s spawn and should be avoided at all costs. While there may be some truth in that, in this article, I’ll share how credit cards can actually be really beneficial for those who use them responsibly and why I use my credit card for almost everything.

Fact: Did you know that 81% of the rich people studied used a reward card?

What Are the Benefits of Credit Cards

Rewards

Probably one of the most enticing things about credit cards is their rewards. There are two main ways to earn credit card rewards:

1. Sign-up bonus
   • Worth anywhere from $200 to even $1,000
   • May need to meet spending requirements within the first three months after opening the account to receive a bonus
   • If the sign-up bonus is on the higher end, the card may charge an annual fee but the sign-up bonus and rewards typically cover it and more
2. Cash-back rewards for everyday purchases
   • Earn a percentage of every purchase you make on the credit card
   • For example, if you spend $100 and the cashback reward is 1%, you will earn $1
   • Cashback can be in the form of dollars or points. The value of points varies across credit cards but in general, 1 point ≈ 1 cent
   • Some credit cards offer higher rewards if the card is used for specific categories, like dining out, travel, or at partner retailers.

Real-Life Usage of Credit Card Rewards

To illustrate how powerful credit card rewards can be, my wife and I have paid for our flights to the Dominican Republic and Malaysia all using credit card points in the span of 3 years! That amounts to about $4,000 worth of flights that we would’ve needed to fork out of pocket without credit card rewards.

We currently use the Chase Sapphire Preferred and Chase Freedom Unlimited to maximize our cashback rewards and it has definitely paid off so far. We pay for groceries, dining out, utilities, shopping, vet visits, online shopping, etc. – things that we were going to purchase anyway with our credit cards if possible.

Do note that we treat our credit cards like a debit cards – we make a budget, have a plan for our expenses, and only use our credit cards for what we were going to use on our debit card anyway to earn rewards. We don’t justify spending just to earn rewards to ensure that we don’t overspend and go crazy on credit card debt.

Safety

Thanks to the Fair Credit Billing Act, credit cards offer cardholders superior consumer protection for purchases made on credit cards.

Ever had an online purchase you made that was faulty, or a service you paid for that was absolutely terrible that you wish you can get a refund but the seller won’t budge? The good news is if you used a credit card to pay for that purchase, you may be able to get a refund by disputing charges.

The technical term for this refund is “chargeback”, and is a powerful tool to protect consumers from:

1. Errors and frauds
2. Terrible goods and services quality
   • This keeps merchants accountable as they’ll have to make sure that they provide quality goods and services or risk getting a chargeback which will hurt profits

Credit Card vs Debit Card Chargebacks

Even though debit cards do offer similar consumer protections, credit cards have an edge in many ways:

• Credit card purchases are borne by the card issuers initially but debit card purchases come right out of your bank account
• This means that card issuers have more at stake as it’s their money and will take a stricter stance when a dispute is submitted
• Debit card liability is higher than credit cards
• Credit card disputes get resolved quicker

Insurance

Some credit cards also offer travel insurance like rental car insurance, baggage delay, lost/stolen baggage, trip delays/cancellation, etc. for free if you pay with your credit card. Make sure you check what is covered as each card varies.

Build Credit

Credit cards are a great tool for building your credit history, which will largely determine what loans you’ll have access to and what the interest rate on the loan will be.

If you use your credit card for everyday purchases and make on-time payments, your credit card company will let the credit bureaus know that you can manage credit responsibly and that should reflect positively on your credit report.

A good credit report may qualify you for favorable loan terms like lower interest rates and even access to more credit.

Do I Really Need a Credit Card To Build Credit?

While there are other ways one can use to build credit, credit cards is probably the simplest and most straightforward way to build credit. Some other ways to build credit:

• RentReporters
• Self
• Credit builder loans
• Experian Boost
• Become an authorized user

For those looking to purchase a home and take out a mortgage, having a strong credit history is crucial as lenders will typically screen applications based on one’s credit score.

Although there are ways to get around this like via manual underwriting, not every lender offers that and it may take longer to be approved as well. My wife was able to get her first mortgage easily at 22 because she had a strong credit history built already coming out of college.

Read more about how to build your credit score here!

Final Thoughts

Credit card rewards, superior consumer protection, and the ability to build credit easily are the main reasons why I use my credit cards for almost everything.

However, if you are struggling with overspending and going into piles of debt, please DO NOT use a credit card until you are disciplined enough and have formed strong money habits to maximize its benefits. The interests on credit cards are notoriously high and can destroy you financially if you do not pay them off in time and let them compound.