11 Reasons to Use Your Credit Card for Purchases

While you may think building credit is the only reason to use credit cards, they come with many other perks and benefits. For one, they are safer to carry than cash and make tracking your expenses easier. Credit cards also offer stronger protection against fraud than debit cards. Additionally, you can earn significant rewards with almost every credit card purchase.

Let’s explore the benefits of credit cards in detail.

1. Build Credit 

Payment history makes up 35% of your credit score, and using your credit card is an easy and accessible way to start building a strong track record. As you make payments on time and in full, you will see an increase in your score, provided you don’t go over your credit limit. 

When calculating your credit score, a credit card company will also consider the length of your credit history, your credit mix, and your credit utilization. Using your card increases your history, adds to your mix, and helps you maintain credit utilization - all of which help increase your score. 

The better your credit score, the more likely you will be approved for other lines of credit, get a higher credit limit, obtain better interest rates, and even get access to better rewards.

2. Cash Back

Several credit cards offer cash-back as an incentive to use your card. With each purchase, you earn a percentage of money back. The amount of cash-back you can earn will vary from the type of purchase and the card issuer. Cash back credit cards tend to have cash back percentages ranging from 0.5% to 6% of the total purchase.

 3. Rewards Points

Credit card issuers also offer reward points when you make purchases. These points can be collected and spent through your issuers on different rewards. Rewards vary from company to company and may include things like gift cards and discounts. You must follow your card issuer’s plan to redeem these points. Most of the time, you’ll need to log into the company’s website to choose your reward.

4. Frequent-Flyer Miles

Credit card miles are a great way to reduce your vacation costs if you are looking for a way to make trips more affordable. Frequent-flyer miles can be redeemed to cover the cost of air travel and are another common reward offered to credit card users. Miles are usually gained through purchases, although some cards offer generous bonuses when you first sign up for the card and/or make a set amount of purchases within a specified timeframe.

5. Fraud Protection

Some card companies like Visa offer consumer protection against fraudulent activity. Visa has a zero liability policy in which users will not be held responsible for unauthorized transactions made with their accounts. Many financial institutions also offer other protections like flagging and halting suspicious activity or providing consumers with the ability to put their cards on hold to prevent unwanted transactions.

Although credit cards can protect you against fraud, it is still important to practice good security habits, like using a VPN when logging in to your bank on a public network. Public networks are a serious security risk and you should be wary when carrying out any kind of transaction when connected to one.

6. Spending Tracking

Since credit cards are tied to a financial account, each purchase is recorded. Some financial institutions even break down your purchase history into various categories on your credit card statement. Your statement can help you understand where you’re spending most of your money, which, in turn, can help you improve your spending habits. 

7. Insurance

Did you know that credit cards can offer their owners different types of insurance? Most do, although their coverages will vary. Make sure to read the fine print carefully to understand what kind of coverage, how much coverage, and what is covered through the insurance from your credit card. 

Types of insurance

Most credit cards come with several consumer protections that users don’t realize they have. Here are the most common types of insurance you can obtain with a credit card:

• Auto Rental Insurance is usually secondary to your personal car insurance. Often, there are specific requirements to benefit from this reward. For example, you must pay for the car rental with the same card you used to reserve it to obtain insurance coverage.

• Travel Insurance typically includes auto rental, baggage delay, lost luggage, trip cancellation, and more to protect you from forfeiting the cost of the many things that can go wrong before or after your trip. 

• Purchase Protection is a little-known credit card offer that can provide consumer protection in several ways. It can be in the form of a product warranty that exceeds the manufacturer’s warranty, or it can offer reimbursement for recently bought items that get stolen or damaged, as long as the claim is approved.

8. Built-In Grace Periods

You will have to double-check your agreement with your credit card issuer, but several companies offer cardholders a grace period during which interest will not be applied to the account holder’s balance. This perk can help you avoid credit card debt and save money while building your credit if you make your payments in full during this period.

9. Safety

Cash is a beacon for criminals because it is easy to steal and difficult to trace. But it is not the only benefit to the safety of credit cards. Once more, cards help protect users against fraud. There are built-in safety checks that no cash transaction can ever have, and you can always cancel or put a card on hold to prevent further fraudulent activity.

10. Balance Transfer

Balance transfers are a great advantage to using your credit card. If you are short on cash, you would have to go to an ATM and obtain more. A credit card can have funds transferred from your phone, making transactions quick and smooth. 

11. Universally Accepted

Another great advantage to making purchases with your credit card is that most are universally accepted. Unlike debit cards that can’t be used for online reservations or payments for things like hotel bookings or car rentals, credit cards allow you to pay for all online purchases. Additionally, having a credit card will be useful when traveling abroad as not all foreign merchants will accept your debit card.

The Bottom Line

Once you have found the perfect credit card and gotten approved, you can begin benefitting from all the advantages of using your card. Credit card issuers offer several safety nets to protect users and provide several rewards for using your card.