You should use your credit card for everything you would otherwise buy with your checking account or debit card, as long as credit cards are an accepted form of payment. It’s beneficial to use a credit card for daily purchases because credit cards offer $0 fraud liability guarantees, and you could be earning extra rewards by using a credit card.
Reasons to use a credit card for everything:
Fraud is easier to handle on a credit card. If unauthorized charges end up on your credit card, you aren’t responsible for paying them, and the money hasn’t actually left your bank account yet. The process of cancelling fraudulent charges on a credit card is relatively simple when compared to the same process on a debit card. Unauthorized charges on a debit card have usually cleared by the time you notice them, so the bank has to investigate the claim and get your money back before the stolen money can be returned to your bank account.
You could save extra by earning rewards. Rewards credit cards typically give cardholders a percentage of their purchases back to them in the form of cash back, miles, or points. Lots of rewards credit cards have generous signup bonus offers for new cardholders, too. These give a certain amount of points, cash back, or miles as a one-time bonus for meeting a spending threshold in the first few months after account opening. If you were already going to spend that amount of money anyway, you may as well get a big bonus for it.
If you always pay your bill in full and the card has no annual fee, you get to borrow money for free. The time you’re given to pay for a credit card purchase – i.e. the rest of the billing cycle plus the grace period – can cut you some slack on cash flow from month to month. And as long as you pay the bill in full by the due date, you’ll get to keep that grace period.
Downsides of using credit cards for everything
It’s not always a great idea to use your credit card every time you have something to pay for. Budgeting can easily take a backseat in that scenario, and it’s possible that you’ll spend more than you can afford to quickly repay, leading to expensive finance charges. Paying interest on a credit card balance will usually negate any rewards you’ve accumulated, and then some, given the high ongoing interest rates that credit cards tend to charge. That’s why it’s important to pay off the balance on time every month when using a credit card for everyday purchases.
On the other hand, if you have a credit card with a 0% APR period, you can strategically use it to finance specific big-ticket purchases or reduce the cost of existing debt. But because that promotional APR period ends, you should not use that credit card for everything – if you do, you’ll risk having too big of a balance to pay by the time interest begins accruing. Besides, the credit cards with the best rates rarely have great rewards.
Things you should NOT use your credit card for
Credit cards are not accepted for everything, at least not directly or without significant fees. So, using one for every type of expense you might come across is not ultimately possible or cost-effective.
For example, using a credit card for mortgage, rent, or loan payments will generally require the use of a third-party money transfer app – and those transfers are usually expensive. Money transfer apps usually treat credit card transactions as cash advances, so they should be avoided due to high APRs and cash advance fees.
A good rule of thumb is, if you have to jump through some hoops or incur a high fee to use a credit card for something, it’s probably not a good idea.
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