Why you should buy everything with credit cards

Having multiple credit cards and playing the rewards game can save you hundreds of dollars each year — if you’re smart about how you use the cards.

“The big fork in the road is whether or not you carry a balance,” says Ted Rossman, senior analyst at Bankrate.com and Creditcards.com. “I think you should use your credit card for everything because rewards are great. They can really add up over time. You get better buyer protection, better fraud protection.

“The one major downside to credit cards is the high interest rates,” he added. “But if you pay in full and avoid those, yes, credit cards are great.”

Chasing rewards can earn you some substantial sign-up bonuses, such as the 75,000 miles from the Capital One Venture Rewards credit card or the $900 cash back from Chase Ink Business Unlimited.

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Those who use credit cards responsibly and don’t keep a balance typically save $300 to $400 a year. Rossman earned $1,701 in credit card rewards in 2022. But getting the most out of your credit cards depends on your spending habits — and finding the perks that can save you the most money.

“If your family spends a lot on groceries, get a card that gives 5 or 6% cash back on groceries,” Rossman said. “That’s a really nice inflation buster right there.

“Maybe consider a second card that’s just a flat rate, something like 2% cashback on everything,” he added.

The rewards that get the most attention are often travel-related, he said: benefits such as free or discounted flights, hotels, rental cars, airport lounge access, priority passes and TSA PreCheck, Global Entry or Clear. Redeeming rewards for merchandise probably won’t get you the most bang for your buck.

More than 80% of Americans have at least one credit card.

Anh Tran, a certified financial planner and managing partner at SageMint Wealth in Irvine, California, recommends having two credit cards, or three if you’re a business owner: one for primary expenses, a second as backup, and a third for business expenses to be incurred separately.

But if you’re not one to pay off your balance before it’s due, she doesn’t recommend having a credit card at all.

“paying 20% ​​interest on a balance you’ve accrued and then you pay interest on top of that, I mean that’s a really big hole you keep digging and it’s going to be really hard to get out of if you don’t pay off your credit card balance, Tran said.

Americans have an average of four cards, but not being able to pay it off in full each month can be detrimental to your credit score and wallet.

Americans’ collective credit card balances totaled $986 billion in the last quarter of 2022, according to the Federal Reserve Bank of New York. Those contributing to that debt should not use credit cards because the interest rates they pay outweigh any card rewards.

How much money you save with credit cards depends on your lifestyle and how you play the game. That is, of course, assuming you use them responsibly.

Watch the video above for more information.

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