For a piece of plastic, a credit card can be a very powerful thing. Not only does it make shopping seamless, but many credit cards also come with a number of perks, including ways to save money on purchases and added consumer protections. As long as you are a responsible credit card user without outstanding debt, there’s no reason why you shouldn’t use your credit card to pay for almost everything.
Last updated: Oct. 15, 2021
Sponsored: From travel rewards to cash back, the right credit card can save and earn you money. Check out PenFed’s credit card options to see how you can make the most of your spending.
It Helps You Build Credit
Your credit score is based on a number of factors, including your repayment history, the length of your credit history and your credit utilization. Responsible credit card use — which includes making on-time payments, keeping credit cards open for long periods of time and only using a small percentage of your available credit — will help your credit score to rise.
You Might Be Able To Get a Sign-On Bonus
If you just opened a new credit card, making purchases with it can earn you a major sign-on bonus. This could be a cash bonus, extra rewards points or extra cash back. For example, with PenFed’s Platinum Rewards Visa Signature® Card, you can earn 15,000 bonus points when you spend $1,500 in the first 90 days. Then as you accumulate points with this card, you can redeem those for gift cards, travel, shopping and more.
It Protects You From Fraud
Fraudulent purchases made with your credit card can be easily disputed. Things aren’t so seamless with debit cards when the money is taken from your account and must be recovered. Using credit cards can give you that extra peace of mind from knowing that you won’t be out any money in the case of theft or fraud.
They Make It Easy To Track Your Spending
It’s hard to keep track of payments you make in cash, but when you pay for purchases with a credit card, it’s very easy to see how much you are spending on what. This can help you to easily track your cash flow and see areas where you might be spending too much.
It Protects You From Dishonest Vendors
When possible, you should opt to pay for services like auto repairs and home improvement jobs with a credit card. This way if something goes wrong, you can easily dispute the charge and get your money back. If you pay with cash or check and your car stops working again or your contractor does a shoddy job installing new flooring, it’s more of a hassle to get your money back.
You Get Extra Time To Pay
Although it is never a good idea to charge expenses to your credit card that you won’t be able to pay back in full by the time your bill is due, it can be useful for making purchases when you’re in between paychecks and don’t have the money in your account to cover the purchase just yet. Paying with credit cards also allows your money to grow in interest-bearing accounts, such as a high-interest savings account or interest-earning checking account, in between payments.
It Can Provide You With Rental Car Insurance
Many credit cards come with a number of consumer protections, one of which is rental car insurance. This means that if you pay for the rental car with your card, you’ll be reimbursed for the cost of theft or collision damage in the event of any incidents.
You Can Rack Up Reward Points
Why not get rewarded for the purchases you would be making anyway? Many credit cards allow you to earn rewards points for every dollar you spend, which can then be redeemed for travel rewards, gift cards, merchandise and more, depending on the card. The PenFed Platinum Rewards Visa Signature® Card gives you 5x points on gas paid at the pump and EV charging stations; 3x points at the supermarket (including most Target and Walmart locations), restaurants, and TV, radio, cable, streaming services; and 1x points on all other purchases. And with a $0 annual fee for this card, those points won’t be costing you anything.
You Can Get Cash Back on Purchases
Shopping with a cash-back credit card means that you save on every purchase. The percentage of cash back you get will sometimes depend on the category of the purchase, such as groceries or specific retailer purchases. Other cash-back cards will give you a fixed amount back on all purchases, regardless of the category.
You Can Earn Frequent Flyer Miles Without Getting On a Plane
Most major airlines now have their own credit cards that enable you to earn miles with your purchases. Typically, $1 spent equals one mile, according to Investopedia.
It Can Protect Your Travel Plans
Your credit cards also might offer some form of travel insurance. Some cards will reimburse you for a trip that is canceled or cut short by sickness, severe weather or some other situations, even if your booking is nonrefundable. You might also be able to get reimbursed for accommodations and meals if your trip is delayed, or reimbursement if your baggage is delayed.
You Can Get Free Checked Bags
Some travel rewards cards allow you to get free checked bags on certain airlines when you book your travel with the card. This can be an extremely valuable perk for frequent flyers.
You Can Earn Hotel Loyalty Points
Some credit cards allow you to transfer rewards points to a hotel loyalty program. That means you can swipe your way to room upgrades and even free stays.
Your Purchases Are Protected
Another perk that comes with some credit cards is protection for your purchases. This can include reimbursement for a purchase that is damaged or stolen and extended warranties on certain products.
You Can Save on Interest
When you move debt to a balance-transfer card with a 0% annual percentage yield, you can save big on interest payments. Just make sure to pay off any debt before the introductory period runs out and the interest rate rises.
It’s Less Likely You’ll Be Stuck Paying Fees
Debit cards charge overdraft fees and may also charge individual transaction fees. Although some credit cards have annual fees, if you use one without an annual fee and pay your bills on time and in full, you likely won’t have to pay any fees for using your card.
They Can Save You Money at Your Favorite Retailers
Retail credit cards can help you save when you shop at your favorite stores. Store credit cards might offer you discounts, cash back on purchases or rewards points that can be redeemed for future purchases. Store credit cards do often have high interest rates, however, so be sure to always pay these cards on time and in full.
You Can Save Money on Takeout
Some credit cards have partnered with food delivery services to get cardholders free delivery. If you order a lot of takeout, this can be a big money-saver.
More From GOBankingRates