You may not be the only one to wonder what does ira stand for, after all, saving for retirement can be confusing but that doesn’t mean it should be ignored. Same goes with credit cards, as there are still plenty that still avoid using, but actually it can be argued that using a credit card for all purchases can be financially smart due to the advantages. Keep in mind though that the advantages can quickly be wiped out if you continue to charge up a balance you are unable to afford and being to be charged interest.
Builds Up Credit
If you have ever looked at taking out a mortgage, getting a car loan, or even quoting insurance rates, you know that your credit score is weighted the most when deciding your interest rate fate when your credit is pulled. The higher your credit score, the better the interest rate you have available to you. By continuing to charge and pay off your credit card each month you will develop not only a solid payment history by paying on time, but by keeping your credit utilization down you can continue to raise your score, probably gaining credit line increases along the way.
These days you can’t be too sure that your account information is always safe, as you hear card being compromised at the gas pump or paying a restaurant tab if you left your card out too long and someone takes note, not to mention even stores themselves now are getting hacked into and leaking customer information. Sure, the same can happen with a debit and you can dispute the charge, but at least with a credit card the money wouldn’t have already come out of your bank account while you wait for the charges to be sorted out.
The first reaction may be that your debit card is accepted everywhere too, but if you have tried to use your debit when trying to check into a hotel or book a rental car, there can be a significant hold placed on your account and may take a week or two to come off and the funds to be put back into your account. With credit, much like a dispute process, would stay pending until the hold is released, but you wouldn’t be responsible paying regardless if a payment came due during that time.
Saving the best for last, probably the number one reason for using a credit card for all purchases is the rewards. By even making the normal purchases that you were going to be making anyways, you can earn points or even cashback, which depending on how much you spend of course, could add up to hundreds of dollars a year that would otherwise be left on the table. Just be careful not to start charging extra items just for the rewards, otherwise if you’re not able to pay back the full balance, the interest will wipe out any rewards you had potentially earned.