Using a credit card for everyday purchases provides convenience as well as rewards. They offer flexibility and security in usage. They also offer a chance to build credit. Credit cards can help in a short-term money crunch.

First of all, it’s convenient. You don’t have to carry around a lot of cash or write out checks. Further, you can use your credit card at most stores and online. Additionally, if your card is lost or stolen, you can easily cancel it and get a new one, unlike with cash.

There is a famous video clip doing rounds on YouTube. In this clip, refer to below the basketball player Shaq O’Neil. He reveals his story of a $10,000 purchase in a Walmart using a credit card. Surprisingly, that was the largest one-time purchase done by anyone in Walmart. This is an extreme case where the athlete bought several laptops, LED television, and other expensive gear for his new apartment. An average user spends a little over $120 on an average visit to a grocery or a convenience store. 

Advantages of using a credit card for everyday purchases

Below are some of the advantages the users can get by using credit cards for everyday purchases of groceries or gas:

1. Convenience 

Firstly, credit cards are a convenient way to pay for purchases. Customers do not need to carry cash with them and then can easily pay for items online or in-store. There is also less risk of theft or money being lost. Cards also provide the customer advantage of not carrying exact change in their pocket every time they walk into a store. Look out for the Best Practices to use your credit card.

2. Rewards and benefits

Many credit cards offer rewards and benefits for using them for everyday purchases. These rewards can include cash back, points, and miles. As well as, other perks such as extended warranty protection or purchase protection. These rewards can provide benefits such as statement credits, merchandise, or travel.

Further, retailers offer extra benefits on co-branded cards. These benefits can include free or expedited deliveries, free coupons or other time-bound offers on credit cards. These co-branded credit cards are very good if you frequent a particular retailer. So, by using their credit card for everyday purchases, customers can earn rewards that they can use later on.

3. Purchase Protection

Credit cards offer a secure way to pay for purchases. Card members can easily cancel their card in the event that a card is lost or stolen. Customers can easily replace plastic cards. Several credit cards offer purchase protection, which provides coverage for eligible items. This is a sort of insurance program. Any item lost, stolen, or damaged is replaced within a certain time period after purchase.

4. Building credit

Using a credit card responsibly can help a customer build a good credit score. This can be beneficial when applying for loans as well as other financial products in the future. Customers should use their credit cards regularly for everyday purchases. They need to pay off the balance in full each month. This will help them build a consistent payment history. These consistent payments help in improving the credit score. Credit bureaus consider the timely payment as a factor when calculating credit scores.

Small purchases made on credit cards help build your credibility with lenders. Financially responsible customer uses their cards to make small purchases. They do not use credit cards for large purchases. Large purchases are usually done in check or other digital forms of payment. At last, it tells the lender that they are a financially responsible customer.

5. Flexibility

Credit cards offer flexibility in terms of payment options. Customers can pay off their entire balance each month or carry a balance and make monthly payments. This flexibility of carrying a balance can help card members

6. Interest-free financing

Credit cards offer an interest-free grace period on new purchases. They allow you to pay off your balance in full each month without incurring interest charges. In this case, if a card member pays their balance in full each month, they won’t have to pay any interest on their purchases. Evidently, this can save them money. This provides them with interest-free financing. This advantage is available in using a credit card in contrast to using a debit card or cash.

What are the downsides of using Credit Cards for everyday purchases?

1. Interest charges:

Firstly, credit cards apply interest charges on any unpaid balance. Expect to pay extra if there is any balance outstanding on your credit card. These interest charges can add up over time and increase the total cost of your purchases. Credit cards carry exorbitant interest charges on the outstanding amount. APR for credit cards ranges from 14% – 30%.

2. Credit score

Secondly, using credit cards for everyday purchases can affect your credit score. Carrying a high balance on your credit cards increases your credit utilization ratio. This is a factor that credit bureaus consider when calculating your credit score. A high credit utilization ratio can lower your credit score.

3. Credit card Fees

Credit cards charge fees for various services. For example, annual fees, balance transfer fees, or late payment fees. These fees can add to the cost of using credit cards for everyday purchases. Some credit cards may add fees on payments of some particular payments. These could include payments to Utilities, insurance, and government services.

4. Debt

Credit Card debts are the most expensive debt in the market. Lenders charge as high as 2 – 4% per month interest on any payment not made within the payment period. They also levy one-time late fee charges as well on any outstanding payments.

For a cautious user, credit cards are a very fine financial instrument. They offer rewards and free credit if you are a financially prudent and responsible user. In the hands of a spender, the credit cards in a Walmart can convert into a debt trap. Unlike Shaq O’Neil in the example, I wrote above. A normal user would spend a few hundred dollars on a typical day-to-day visit to a grocery store. Are you tired of your credit card debt? Look for our guide to managing your credit card debt.

Credit cards for everyday purchases

Finally, using your credit card for everyday purchases can offer convenience, rewards, interest-free financing, and purchase protection. However, it’s important to use your credit card responsibly. Avoid carrying a high balance on your card to avoid interest charges. Maintain financial prudence and avoid negative impacts on your credit score.