I have a confession to make: I honestly can’t remember the last time that I paid for something with cash.
Seriously, I use my credit card for virtually every purchase I make. Whether it’s food, clothes, or even just a one-dollar soft drink from McDonald’s, I rely on plastic to get all of the things I need.
But why the aversion to paying for things with cash or debit? After all, aren’t all credit cards and debt “evil” (according to some popular financial gurus)?
No, of course not. In fact, using your credit cards might actually make your spending easier and keep more money in your pocket over time. Here’s why I switched to using credit cards full-time and why you should consider doing the same:
They’ll Help You Build Up Your Credit Score
Back when I turned 18, my dad had me sign up for a credit card and start making regular purchases with it right off the bat. I thought everyone did this until I started my first “real” job after college and had a coworker that was totally against using credit cards.
A few years later, my coworker and I each separately started shopping for houses. When it came time to apply for a mortgage, mine was approved but his application was not.
Want to know the reason why? Thanks to years of responsible credit card usage, I had built a solid credit history and earned an outstanding FICO score. My colleague, on the other hand, basically didn’t exist in the eyes of the credit industry.
Therefore, he was seen as a risk since there was no proof that he was capable of being able to make timely payments.
Not establishing a credit history is a major risk for people who are averse to using credit cards. Yes, on one hand, you might save yourself from the possibility of getting into debt.
But on the other hand, you shoot yourself in the foot by not demonstrating that you’re creditworthy which will keep you from qualifying for better interest rates and loan terms.
My advice: If for no other reason, use a credit card whenever you can just to build up your FICO score. Even if it’s just simple stuff like gas and groceries that you’re going to buy anyway, look at it as an opportunity that will have significant long-term benefits.
Credit Cards Make It Easier to Track Your Spending
Do you have a budget? I have a friend that’s really into tracking every purchase right down to the penny.
Whether it’s by cash or card, he dissects every purchase and manually categorizes it into an Excel spreadsheet. He believes that by doing this he can more accurately forecast how much he’ll spend every month and be better prepared.
I, on the other hand, have a much easier approach to budgeting. Since we purchase nearly everything with our credit cards, I just take the amount I spent last year at this time and use that for my budget. Simple as that!
I like this approach because not only is it way less time-consuming, it’s also very logical and realistic. The odds are pretty good that if I spent X number of dollars last year at this time, I probably will again this year too.
On top of that, if you really did want to break down your spending into more detail, most major credit card companies will already do this for you. They automatically sort purchases into specific spending categories like food, clothes, auto, etc.
That’s way better than wasting a bunch of time trying to sort all that out yourself manually.
Thousands of Dollars in Rewards
Without a doubt, one of the primary reasons why I use my credit cards for every purchase I can is because I want to maximize my rewards earnings each year.
For almost two decades, I’ve received countless incentives from the credit card companies:
- Statement credits
- Gift cards
- Physical items (electronics, etc.)
- Travel points (good for free flights, hotels, car rentals, etc.)
In fact, one year I earned over $8,000 worth of redemptions!
Most of these rewards have been earned using one of two methods:
- Points for purchases. For every purchase you make, you earn 1 to 5 points that can be redeemed for some sort of reward.
- Introductory bonuses. Many popular credit cards will also have welcome promos where you might earn $500 if you spend $3,000 in the first 3 months (or a similar offer).
If you’re the type of person who pays off their credit cards religiously every month and never comes close to exceeding their limit, then why not take advantage of these opportunities?
For buying the things you were going to buy anyways, seize the chance to get thousands of dollars worth of cash, gift cards, or free travel towards your next vacation.
Credit Cards are Safer Than Cash
Have you ever planned on making a relatively large purchase like buying some new furniture or putting a down payment on a car?
Let’s be real … doing that with cash would be kind of a risky move.
It’s not smart to have that much cash on you in person or even in your home because if someone ever stole it, there would be no way of ever getting it back.
By contrast, carrying around plastic is much more secure. Even if your wallet was stolen, every illegal purchase would be completely traceable and can easily be refuted. It’s just a much safer way to spend.
Finally, let’s also not forget that credit cards just make everything more convenient.
You don’t have to worry about having enough cash on you or going to the ATM if you run out. Plus, as silly as it sounds, you also don’t have to worry about what you’ll do with all that loose change you’ll get back from each purchase.
If you’re someone who likes to travel light, then using a credit card for all your upcoming purchases is the right move. You’ll have so much more peace of mind knowing that all it takes is just the swipe or tap of one plastic card.
If you’re someone who’s responsible with money and has no problem paying off your balance every month, then there’s a lot of benefits to using your credit cards for as many purchases as possible.
Not only can it help you to earn thousands of dollars in rewards and travel points, but it will also make it easier to track your purchases. On top of that, they’re safer than cash and more convenient to use.
If for no other reason, use credit cards to help build your credit history and raise your FICO score. Trust me – when you qualify for the best interest rates or loan offers, you’ll be glad you did.