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This article was last updated Jul 22, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
If you aren’t already using a credit card for most of your everyday purchases and your occasional big expenditures, you may want to rethink your payment strategy. That’s because credit cards offer protections and rewards that you won’t get using debit cards, checks or cash.
Of course, using a credit card should not be considered to be a license to spend more than you would otherwise. It’s crucial to stick to your budget and only use your credit card for purchases you would make even if you didn’t have a credit card.
But if you treat your credit card like cash, pay your bill on time every time and pay off your balance every month as much as possible, then you’re on track to benefiting from all the perks and benefits of credit cards, as well as building up a solid credit score with responsible use.
In this article:
- Should you use your credit card for everything?
- Expensive purchases
- Free money
- Fraud protection
- Free travel
- Online shopping
- When you shouldn’t use your card
- Do you need more than one credit card?
Should you use your credit card for everything?
Here are a few examples of situations where using a credit card is the best payment choice:
Extra protection for expensive purchases
Some cards, such as the Chase Sapphire Preferred® Card, offer purchase protection. On the Chase Sapphire Preferred® Card, this means your new purchases are covered for 120 days against damage or theft, up to $500 per claim and $50,000 per account.
60,000 bonus points
2X points on travel and dining
1:1 point transfer to leading airline and hotel loyalty programs
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
See additional details for Chase Sapphire Preferred® Card
It’s also smart to use a credit card when making an expensive purchase because your credit card issuer can often help you with dispute resolution if a merchant has sold you a damaged item or provided you an unsatisfactory service. This protection stems from the Fair Credit Billing Act — which affords cardholders protections if the cardholder is unable to resolve an issue with the merchant after making a good faith effort to do so.
If you find yourself in such a situation, make sure that you’ve made a good faith effort to resolve the issue with the merchant first. If unsuccessful, then contact your card issuer to initiate a dispute. Make sure to save as much documentation as possible (such as receipts and written correspondence) about the purchase and why it was unsatisfactory. The issuer will typically remove the charge from your bill until an investigation is completed.
If you know you will need to make a big purchase in the near future, you might be able to apply for a credit card offering 0% introductory APR for a specified period of time of up to a year or more, or a card that offers promotional financing such as the Amazon.com Store Card or Lowe's Advantage Card. One caveat about promotional financing (also called deferred interest) vs. a 0% introductory offer, is that if you don’t pay off the entire balance within the promotional timeframe, you may get hit with back interest from the time of purchase.
Finally, some merchants, such as hotels or car rentals, place a hold on your card to cover any incidentals. If this happens with a debit card, the money will eventually be released to you after the purchase clears, but you’re still without that money until the transaction is complete. If you use a credit card and a hold is placed on it, you’re not waiting on the merchant to return money to your checking account.
If you’re not using a credit card to earn cash back or rewards points on your everyday purchases such as groceries, restaurants or gas, you’re leaving money on the table. There are many cash back rewards cards available that don’t charge an annual fee. If you use one of these cards for purchases you’d be making anyway, and you pay off your bill before interest charges accrue, you’re essentially earning free money with your credit card.
Many credit cards offer protections such as zero liability and fraud protection, which protects you if an unauthorized charge is made on your account or if your card is lost or stolen. For example, that kind of protection can come in handy at the gas station, where bad actors often commit skimming fraud by attaching devices to card payment terminals and ATMs, or in the case of data breaches. While the federal Truth in Lending Act stipulates that cardholders will not be liable for fraudulent charges to their cards in excess of $50, most card issuers offer $0 liability insurance in those cases. Debit cards, on the other hand, require that you notify the bank within two days of discovering fraudulent use. After two days, you could be liable for up to $500.
There is a long list of credit cards to consider if you want to earn travel rewards. Some of the things you can generally redeem travel rewards for include airplane tickets, rental cars, and hotel stays.
One standout in this area is the Chase Sapphire Reserve®. Sure, it charges a $450 annual fee, but if you’re a heavy spender on travel and restaurants, this card is well worth considering. It offers: 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. It also comes with a signup bonus where you can Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases.
$300 Annual Travel Credit, Airport Lounge Access, and Flexible Redemption Options
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- Named "Best Premium Travel Credit Card" for 2018 by MONEY® Magazine
- $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
- 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. $0 foreign transaction fees.
- Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 50,000 points are worth $750 toward travel
- 1:1 point transfer to leading airline and hotel loyalty programs
- Access to 1,000+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select
- Up to $100 application fee credit for Global Entry or TSA Pre✓®
See additional details for Chase Sapphire Reserve®
In addition, the Chase Sapphire Reserve® has a long list of perks, including:
- Trip cancellation and interruption insurance
- Auto rental collision damage waiver
- Lost luggage reimbursement
- Trip delay reimbursement
- Emergency evacuation and transportation
- Purchase protection
- Return protection
- Extended warranty protection
On the other hand, if you’re looking to start your travel rewards experience with a card that doesn’t carry an annual fee, the Discover it® Miles and Capital One® VentureOne® Rewards Credit Card are two cards that might get you started.
We'll match all the Miles you've earned at the end of your first year.*
1.5 Miles per $1 Spent*
Redeem your Miles as a statement credit towards travel purchases*
- UNLIMITED BONUS: Discover will match ALL the Miles you’ve earned at the end of your first year, automatically. For example, if you earn 35,000 Miles, you get 70,000 Miles. That’s $700 towards travel! The more you earn, the more you get.
- Earn unlimited 1.5x Miles for every dollar spent on all purchases - with no annual fee.
- No Blackout Dates. Simply pay for travel purchases like airlines, hotels, rental cars, and more with your Discover it® Miles card.
- Miles Pay You Back. Easily redeem Miles as a statement credit for travel purchases. Or get cash.
- Freeze your account in seconds with an on/off switch either on the mobile app or website to prevent new purchases, cash advances, and balance transfers.
- Get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
- Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
- See Rates & Fees
See additional details for Discover it® Miles
1.25 Miles per dollar on every purchase, every day
0% intro on purchases for 12 months
13.74% - 23.74% (Variable)
- $0 annual fee and no foreign transaction fees
- Earn a bonus of 20,000 miles once you spend $1,000 on purchases within 3 months from account opening, equal to $200 in travel
- Earn 1.25X miles on every purchase, every day
- Travel when you want with no blackout dates and fly any airline, stay at any hotel, anytime
- Miles won't expire for the life of the account and there's no limit to how many you can earn
- Transfer your miles to over 12 leading travel loyalty programs
- Enjoy 0% intro APR on purchases for 12 months; 13.74% - 23.74% variable APR after that
See additional details for Capital One® VentureOne® Rewards Credit Card
Online shopping protection
Whether you need to dispute a fraudulent transaction or get a refund from an online seller that didn’t deliver what you expected, you’re better off using a credit card rather than a debit card.
If you were the victim of a data breach of a retailer’s database, for example, those fraud and zero liability protections mentioned earlier will protect you if a crook uses your card details. When it comes to getting a refund from an online seller and you are having difficulty getting the retailer to cooperate, you can use your card’s dispute resolution service to help you get a refund.
You also might be interested in getting a card that offers return protection. Eligible cards issued by American Express have this perk, which the company describes on its website as follows:
“If you try to return an eligible item within 90 days from the date of purchase and the merchant won’t take it back, American Express may refund the full purchase price (excluding shipping and handling), up to $300 per item, up to a maximum of $1,000 per card account per calendar year based on the date of purchase, if you purchased it entirely with your eligible American Express card.”
However, note that American Express has a long list of exclusions and limitations to return protection, with items such as books, jewelry and firearms not being eligible for a refund.
Finally, if you’re looking to earn cash back or points, some credit cards offer rewards for online shopping. Two worth considering for this category include the Discover it® Cash Back and the Uber Visa Card. The Discover it® Cash Back offers 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically. Meanwhile, the Uber Visa Card offers 5% back in Uber Cash on Uber rides, Uber Eats, and JUMP, 3% in Uber Cash on restaurants, bars, hotels, and airfare, and 1% back in Uber Cash on all other purchases
Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically*
Earn 5% cash back at different places each quarter up to the quarterly maximum, when you activate*
Any amount, any time. Cash back rewards never expire*
- INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
- Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
- Plus, earn unlimited 1% cash back on all other purchases - automatically.
- Redeem cash back any amount, any time. Rewards never expire.
- Use your rewards at Amazon.com checkout.
- Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
- No annual fee.
- See Rates & Fees
See additional details for Discover it® Cash Back
When shouldn’t you use your credit card
Some institutions charge a convenience fee for using a credit card, but accept other forms of payment (such as an e-check from a checking account) without that additional charge. You might encounter this when paying college tuition, paying rent, or paying a utility bill. So, if it you costs you extra to pay with your credit card, you’re most likely better off using an alternative form of payment.
Do you need more than one credit card?
You don’t necessarily need more than one credit card from the standpoint of protecting your purchases. However, having the right mix of credit cards can help you optimize the rewards you earn — and having a higher total credit limit is good for your credit score.
For example, if you dine out a lot, it might make sense to use a card like the Capital One® Savor® Cash Rewards Credit Card or Uber Visa Card to get a high cashback rate on restaurant purchases, while using a flat rate card such as the Citi® Double Cash Card – 18 month BT offer to get cash back on your other purchases.
4% Cash Back on dining; 4% Cash Back on entertainment; 2% Cash Back at grocery stores; 1% Cash Back on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020.
Earn a one-time $300 cash bonus after you spend $3000 on purchases within the first 3 months from account opening
No minimums for redeeming and cash back won't expire for the life of the account
- Earn a one-time $300 cash bonus after you spend $3000 on purchases within the first 3 months from account opening
- Earn unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020.
- No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
- No foreign transaction fees
- Capital One cardholders get access to premium experiences in dining, entertainment and more
- $0 intro annual fee for the first year, $95 after that
See additional details for Capital One® Savor® Cash Rewards Credit Card
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay.
0% for 18 months on Balance Transfers
15.49% - 25.49% (Variable)
- Earn cash back twice. Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
- To earn cash back, pay at least the minimum due on time.
- Balance Transfer Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 15.49% – 25.49%, based on your creditworthiness.
- Balance Transfers do not earn cash back.
- The standard variable APR for Citi Flex Plan is 15.49% – 25.49%, based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.
See additional details for Citi® Double Cash Card – 18 month BT offer
The bottom line
You should be using a credit card for almost all your purchases, except when it costs you extra to do so. Benefits can include things such as fraud and zero liability protection, purchase protection, cash back, travel rewards and a buffer between transactions gone wrong and your bank account.
Just remember — financial discipline is key. Spend only what you can afford, make your card payments on time every time, try not to revolve a balance so that you avoid interest charges, and apply for the card or cards that make sense based on your credit score and spending habits. With these steps, you can make your credit card work for you!