Why It’s a Good Idea to Use a Credit Card for Everyday Purchases

If you tend to reach for a debit card or cash for daily spending and reserve your credit card for the occasional big-ticket purchase or an emergency, there’s a good chance you could be overlooking significant opportunities and benefits. Along with added convenience, credit cards offer enhanced security and valuable consumer protections. Moreover, responsible use of a credit card is an excellent way to build your credit and capitalize on enriching rewards, discounts, and special deals. Get more for your money by ensuring that you’re familiar with these important advantages that credit cards can offer, and just how to optimize them to put more money back in your wallet:

Credit cards can help you to establish your credit standing.

Your credit history affects your ability to do anything from renting an apartment or home, to opening a utility account in your name. And not only does your credit score impact whether you may qualify for a loan for a specific amount, but it is used to determine the interest rate and terms that you’re eligible to receive.  

Responsible use of credit cards can enable you to build a payment history and improve your credit score — giving you access to lower interest rates and allowing you to pay substantially less for the money you borrow as compared with those who have a lack of credit or poor credit. What’s more, a favorable interest rate can make all the difference when it comes to the affordability of important items and assets like a home or vehicle.

One of the simplest and most effective ways to build your credit is to use a credit card regularly and make timely monthly payments. The largest component of your credit score is your payment history (or track record), which comprises 35 precent. But for strong credit, you’ll also want to pay off as much as possible of your card balance each month (and ideally, the entire balance, which allows you to avoid interest charges). 

The lower your account balance is relative to your credit limits, the better for your credit score. As Experian has asserted, exceeding a 30% credit utilization ratio will have a significantly negative impact on your credit score. The credit utilization ratio measures the amount of revolving credit you are using as compared to how much lenders have extended to you. For superb credit, some experts recommend aiming to get your credit utilization below 10 percent. 

You can leverage your credit card spending into valuable rewards and take advantage of partnership discounts.

The opportunity to get rewarded for the spending you’re already doing can be an enticing enough reason on its own to use your credit card for daily purchases, and points can add up fast. Programs like CURewards allow you to earn points for every dollar you spend toward rewards such as vacations, gift cards, and brand-name merchandise. Raking in rewards can be a great way to boost your spending power and even reign in your budget without having to make lifestyle sacrifices. Redeeming points for cash or credit on your card statement can also be a painless way to better manage your money.

To maximize your rewards, be sure to explore the discounts, special deals, and bonus points available through merchants that partner with your rewards program, both in-store and online. Find out whether your card offers the same rewards rate throughout the year, or if you can earn bonus points for certain purchasing categories that may change quarterly or monthly. Another way to boost your rewards-earning potential is to use your credit card provider’s online shopping portal to buy items you need. To earn the additional rewards, you’ll just need to log in to the site, and click through to a retailer that is partnered with your credit card to make the purchase with your card. 

But keep in mind that as gratifying as it can be to earn rewards for shopping, it pays to be honest with yourself about your spending so you don’t get overextended just to earn more rewards. If you carry a balance on your credit cards from month to month rather than paying the entire balance in full, the interest charges you’ll pay and the potential dip in your credit score can quickly negate the benefits of rewards.

Credit cards provide more safeguards against fraud.

Clearly, carrying cash to make purchases can be problematic for the simple reason that you often don’t get your cash back if you lose it or if a thief gets hold of it. But credit cards also provide important advantages over debit cards when it comes to security. As NerdWallet has put it, it is the card issuer that must fight to get the money back when fraud occurs on a credit card. When money is stolen from a debit card, the consumer must fight to get the money back.

If someone steals your credit card, the money is taken from your creditor and it’s highly unlikely that you will be held liable for any unauthorized purchases if you report the fraud as soon as you discover it. All credit card issuers are required to limit your liability for unauthorized purchases to $50, but zero liability fraud protection is standard for most cards. Moreover, credit card issuers will generally remove fraudulent charges on your credit card as soon as you report the incident.

But if someone steals your debit card, the criminal has direct access to the money in your account — potentially leaving you without needed funds while your financial institution investigates the matter. 

Credit cards offer an abundance of perks to safeguard your stability and financial well-being.

Credit cards tend to come with robust consumer protections that can provide peace of mind, while shielding you from stress, disruptions, and financial setbacks that can occur in various situations. Some of these benefits might include extended warranties, personal identity theft protection, and significant travel-related protections. Most credit card issuers also offer lesser-known but valuable perks like price protection, which allows you to receive a refund if the price of an item bought with the card drops within a certain timeframe. You may also have the option to purchase payment protection, which lets you stop making minimum monthly payments during a period of involuntary unemployment or disability.

You can take advantage of the time before your payment due date to earn interest or dividends on your money.

Lastly, if you’re disciplined about keeping your spending in check, you can earn money with your credit card by making effective use of the time between using your card for a purchase and paying your bill. This strategy is simple: just park the funds you’ll use to pay off your credit card balance in an account that generates earnings in the form of interest or dividends, and be sure to pay off your card completely each month. To boost your earnings, keep these funds in a savings or money market account that offers a competitive annual percentage yield (APY).

Eager to avail yourself of the financial freedoms and opportunities afforded by a credit card with generous perks and benefits but don’t currently have a card with these offerings? A Platinum Visa® from The Police Credit Union is an excellent option to consider. Along with a competitive APR as low as 9.25% and zero balance transfer and cash-advance fees, our Platinum Visa has a robust CURewards Program. In addition, you’ll enjoy peace of mind with extended warranty and price protection, and reimbursement for covered expenses if you become the victim of identity theft. Travel benefits also include luggage reimbursement, Travel Accident Insurance, and Auto Rental Collision Damage Waiver. Find details and open your Platinum Visa today by completing our fast application here.

Unlock your financial freedom with our Platinum Visa® with competitive rates and zero cash advance fees.

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