Diner’s Club introduced the first credit card in 1950. Since then, the credit card industry has evolved to offer several different types of fee structures, rewards programs and perks. Today, credit cards are one of the most popular payment options available. In fact, according to Forbes, consumers use credit cards for nearly 29% of all payments.
However, these lending accounts come with a high level of responsibility. Those who use them incorrectly may face significant costs as a result. What are the smartest ways to use a credit card to avoid the costly result of improper use?
5 Best Ways To Use a Credit Card
Cardholders can use their cards in many ways, but the most advantageous ways won’t leave them in a pickle. Those who use credit cards should use them responsibly and try to pay them off completely every month. After all, when cardholders pay their balances in full every month, they don’t pay any interest charges.
However, that’s common knowledge. So, what about tips and tricks to get the most out of these unique lending accounts? Here are the five best ways to use a credit card.
1. Buying Online
Credit cards are a premier payment option for consumers who make online purchases. After all, it’s impossible to pay with cash when spending money online — that is, unless the website is one of the rare few that offer cash on delivery.
Cardholders can get more out of their credit cards by shopping online, too. Several major online brands offer rewards credit cards that allow cardholders to earn significant cash back or rewards points when they shop on the company’s website. Cardholders should take advantage of these options to make sure they get the best bang for their buck.
2. While Traveling
Another compelling way to use credit cards is by using them while traveling. There are a few reasons credit cards come in handy for travelers:
- Security. Cash isn’t secure. When people travel and they bring cash with them, they could lose that cash or someone could steal it, leaving the consumer in a bind. Sure, it’s a good idea for travelers to always have some local cash available, but they should limit the amount of cash they carry — especially if they have a card that doesn’t charge foreign transaction fees.
- Fraud. Credit card holders aren’t liable for fraud, and that protection goes with them when they use their cards as they travel.
- Travel Rewards. Some travel rewards credit cards give cardholders more points when they use their cards for travel purchases. So, those who use their credit cards when they travel have more opportunities to earn rewards.
3. During Emergencies
Emergencies happen, and when they do, it’s great for consumers to have a financial cushion to fall back on. Credit cards are often that financial cushion. When there’s an emergency, if the consumer doesn’t have access to enough liquid cash to cover the cost of the event, it’s perfectly fine to use a credit card to cover the expense.
Keep in mind that while it’s fine for cardholders to use their credit cards during an emergency, it’s important to do so responsibly. It’s also rarely wise to use a credit card to cover the full cost of an emergency.
Nonetheless, when consumers have no other option, it’s okay to take advantage of available credit as long as they make a plan to pay off the new balance in a reasonable amount of time.
4. Making Large Purchases
Credit cards are often a compelling payment option when consumers make large purchases. There are a few reasons people use credit cards to make bigger purchases:
- Pay Over Time. Credit cards give consumers a way to pay for large purchases over a period of time, relieving the burden of a large, immediate expense. Some credit cards even offer buy now, pay later options.
- Get More Rewards. Some credit cards increase rewards when borrowers spend more money. Borrowers can use large purchases to hit the next rewards threshold and get more bang for their buck.
Nonetheless, those who do use their credit cards for large purchases should make a plan to pay those purchases off in a reasonable amount of time to avoid paying too much interest.
5. Taking Advantage of Rewards Systems
There are several rewards credit cards to choose from; seemingly every major lender offers them. These rewards programs incentivize loyalty by giving cardholders a small reward every time they use their cards to make a payment.
Although it’s good to use rewards credit cards, cardholders should be sure not to let the promise of rewards allow them to rack up balances that are too high to pay off in a reasonable amount of time.
Credit cards are compelling tools that cardholders can use to improve their overall financial stability while generating rewards. Use your credit cards in the ways above to get the most bang for your buck.
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- Forbes Advisor. 2022. "9 Interesting Credit Card Statistics."
- GoAbroad. 2022. "Should You Use Cash or Credit Card When Traveling?"
- Chase. "Using credit cards for emergencies."