4 Reasons to Buy Everything With Credit Cards

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If you pay your bill in full, there’s no better way to make purchases. 

At first, the idea of paying for everything with credit cards might sound like a bad idea. There are so many horror stories about people who ended up trapped in credit card debt for years. Shouldn’t you be trying to spend less on your credit cards, not more?

Not quite. While you do need to be careful when using credit cards, they offer big advantages over other payment methods, like debit cards and cash. The key is sticking to your normal spending habits, only charging what you can afford, and paying your bill in full every month. If you do that, you’ll never end up in debt or paying interest, and you’ll be able to take advantage of these credit card benefits.

1. Rewards and bonuses

Many credit cards offer rewards and bonuses, and these can save you lots of money on your regular expenses. For example, there are rewards credit cards that earn a flat rate of 2% back on purchases. If you spend $30,000 per year, that’s $600 in cash back, just for paying by credit card. Other cards offer higher rates in bonus categories, such as 4% back on groceries or gas.

In addition, many of these rewards cards also offer sign-up bonuses for new cardholders. This is an incentive you earn if you complete spending requirements, such as spending $2,000 in the first three months. Most sign-up bonuses are worth at least $100, and some of the best sign-up bonuses are worth $500 or more.

2. Complimentary protections

Paying with your credit card could also get you complimentary protections on eligible purchases. These protections depend on the card, but here are some examples that many cards offer:

Purchase protection covering new purchases that are damaged or stolen (usually for the first 90 or 120 days)Extended warranty coverage that extends the manufacturer’s warranty by a year or moreCellphone insurance covering damage or theft if you pay your monthly wireless bill with your credit cardTravel protections, such as lost and delayed luggage reimbursement and trip delay insurance

For an example of how credit card protections can work, let’s say you buy a new iPad. A few weeks later, it gets stolen. If you paid for it with a card that offers purchase protection, you could file a claim to get your money back.

Protections like these are why you should always make big purchases and travel purchases with a credit card. You can see which protections a card offers in the guide to benefits or on its web page.

Read More: 4 Reasons to Delete Your Credit Cards From Amazon

3. Build your credit score

Using a credit card regularly is a great way to improve your credit score. Each time you pay with a credit card, you’re technically borrowing money. When you make a payment, you build your payment history, the most important part of your credit score. And if you pay in full by the due date, you won’t get charged any interest.

If you do that every month, you’ll work your way toward an excellent credit score. That will help you qualify for the lowest interest rates on loans and credit cards with more benefits. There are all kinds of other ways your credit score affects your life, too. For example, in most states, your credit score can affect your insurance rates. In fact, car insurance costs for drivers with poor credit are over double those for drivers with excellent credit.

4. A safety net in case something goes wrong with a purchase

One of the nice things about paying by credit card is that you can get your money back if there are issues with a purchase. You need to try and resolve things with the merchant first. But if the merchant is unhelpful, you can dispute the transaction with your credit card.

Your card issuer will immediately give you a temporary credit for the transaction. It will then investigate the issue, and if it finds that you’re in the right, that temporary credit becomes permanent. To be fair, this benefit isn’t exclusive to credit cards, as you can dispute transactions made on a debit card, too.

Don’t let their controversial reputation fool you. Even though credit cards have their risks, those risks are entirely avoidable. Just to reiterate, what makes all the difference are your spending and payment habits. It’s extremely important that you spend normally with your credit cards and always pay in full. If you do that, then you’re going to come out ahead with the rewards, bonuses, and other perks that credit cards offer.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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