Debating whether or not an aaa membership cost is worth putting into your budget is the type of decision you need to make for all monthly expenses to try and free up extra money wherever you can. By opening up funds, you can then use to build an emergency fund, pay off debt, or increase contributions to retirement. Depending on if you use your debit card, cash, or credit card for purchases, could have an affect on your overall protection, credit score, and in essence, deciding how much you are paying each month. While credit cards may have had a bad reputation before, it actually can make good financial sense to not only use a credit card for purchases but can be argued for using on every single purchase.
Using comes with Great Discipline
While there are plenty of reasons why it’s acceptable to use a credit card for all purchases, it comes with the understanding that there is a responsibility that comes regular use of a credit card. Discipline is a huge factor in that if you charge more than you can afford, getting into debt can be coming soon, as interest will begin to build up, putting you further and further away from paying the balance off. As long as you can charge what you can pay off based on the statement balance, by the due date, then you can take advantage of the many benefits.
Great Protection Against Fraud
These days you just never know who can get ahold of your information. You always hear about people getting information stolen at the gas pump or leaving your card out too long when paying a bill, so although you can be careful, your information being leaked my still be out of your control. When using your debit card, purchases come directly out of your bank account, so if any fraud takes place your account could potentially be wiped out until resolved, but with a credit card the dispute process is much easier, as the charges will stay ‘pending’ until resolved, with your money safe in your bank account.
Sure, debit cards may be accepted everywhere, but there’s a difference. When you go to check into a hotel room or rent a car, there can be a significant hold put onto your account to ensure you have the adequate funds for damages, so this can be hundreds of dollars that will be removed from your account until after completion, plus however long that takes to come back into your account. Much like the dispute process, a hold can be put on your credit card but will not affect what you owe, as that hold amount will be removed by the time you need to pay the bill.
Builds Up Credit Score
You know if you have applied for a mortgage, loan, credit card, even a job these days, credit score is a major, and deciding, factor for your approval, denial, and what interest rate you will be granted, so the better the score, the better the interest rate. As you charge and payoff your credit card each month you will continue to build up your credit score, which can eventually save you money each month as you lock into a better rate and terms.
Rewards Add Up Quickly
Probably the best reason to use a credit card for all purchases is for the rewards. By making purchases on your account you can earn points to redeem gift cards to use at restaurants, the gas pump, stores, or even better, cashback. Now this is where you need to be careful because if you just use your card to charge everything to see the rewards add up, you could run the risk of not being able to pay the balance and be charged interest, which would wipe any rewards out, but if you can use on the purchases you were going to make anyways, that free money can go a long way and would otherwise be missing out.
Grace Period Until Next Month
As you charge throughout the money, a credit card is nice because it doesn’t come out of your account right away and will not be due until next month, if you like the idea of being a month behind in paying. It’s nice you get to get a couple of paychecks before the payment is due, but to sound like a broken record, be sure that you charge what you can afford, the full monthly statement, otherwise interest kicks in…