- Credit cards offer better purchase protection and less fraud liability compared to debit cards.
- Most credit cards earn at least 1% back on everyday purchases — and you can often earn much more.
- But you should only use credit cards if you consistently pay off everything you owe each month.
This guide explains the top benefits of using a credit card for everyday purchases.
Paying by credit card: What you should know
You've probably heard that debit cards are much safer to use than credit cards: They help you stick to a budget, they're convenient, and they help you avoid debt and high interest.
Misconceptions about credit cards
Credit cards often get a bad rap. But here's a perspective from the opposite stance: Used responsibly, credit cards offer better purchase protection than debit cards, protect you from losing your bank savings in the event of theft or fraud, and help you build strong credit over time.
Earning rewards and cash back
Many credit cards reward you for spending money. Competition is fierce these days: The best credit cards for rewards regularly earn up to 5% back on every dollar spent in popular categories such as dining, gas, and travel.
Reward types: Cash back or points and miles
Most credit cards either earn cash back or reward points from the issuer, such as Chase Ultimate Rewards or Amex Membership Rewards.
Even credit cards with no annual fee often earn at least 1% to 2% cash back per dollar spent, and premium travel credit cards often earn far more. These rewards can often be used at a value of at least 1 cent per point, and you can often get significantly more value by using your credit card rewards for free travel and cheap flight deals.
Examples of cash back or points
Some credit cards earn travel reward points that can also be used as cash back. The Chase Freedom Flex® is one such example.
This card checks many of the boxes for rewards. The Chase Freedom Flex® earns up to 5% on bonus categories, 3% on dining and most travel, and 1% back on all other purchases. While it's technically a cash-back card, you earn rewards in the form of Chase Ultimate Rewards points.
If you only have this credit card in your wallets, you can redeem your points as cash to help pay off your statement each month. But if you pair the Chase Freedom Flex® with a Chase travel credit card like the Chase Sapphire Preferred® Card and the Chase Sapphire Reserve®, you can transfer your Freedom Flex points to the travel credit cards, and in turn use those toward travel in the Chase Travel℠ Portal or with Chase airline and hotel partners.
Building and improving credit
Your credit card usage can affect your credit score — for good or bad
Using a credit card for payments can help build a good credit score if you consistently pay off your full balance each month and maintain low credit utilization. However, your score will tank if you regularly miss payments, carry a high balance, or exceed your credit limit on a regular basis.
Tips for using credit cards to build credit
You can build credit with a credit card by following a few crucial steps. The first one is to spend less than your credit limit. Work your way up to larger purchases after you've made a number of smaller purchases and paid them off on time.
If you have a low credit score, you may consider a secured credit card for rebuilding credit. With these types of cards, you put down a cash deposit of the amount you'd like to spend, and the issuer uses your own money to insure the spend on your secured card. Many issuers evaluate your credit after a few months with a secured credit card; if you have proven responsibility, you may be offered the chance to upgrade to a nonsecured credit card so you can get your cash deposit back.
Enhancing purchase security
Most credit cards offer multiple forms of protection, which can work for you in several different ways.
Fraud protection and security features
Federal law protects debit and credit cardholders alike in the event of proven fraud or theft. But actually reaching a resolution can take a while, depending on your method of payment.
Debit cards are directly linked to your bank account, so anyone who finds yours lost on the street or hacks the data from a retailer database can wipe out your savings in a few seconds. Even if your bank is able to track the theft, it could take weeks or months to get your money back. Unless your bank goes above and beyond to refund your money before they've tracked down where it went, you might end up without cash for several days.
Since your credit card isn't directly linked to your checking or savings account, nobody can get quick access to your money. Unscrupulous thieves who try to run up charges on your card will quickly trigger fraud alerts, and even if the transactions go through, calling your bank for assistance usually results in stopped payment so that no payments are made.
Chargeback rights and dispute resolution
If a merchant fails to provide a service or product you paid for with a credit card, you can escalate the issue to your credit card issuer, which will investigate the situation and potentially initiate a chargeback if the merchant doesn't follow through.
If you and the merchant disagree on the services provided, credit card issuers can also get involved. You'll usually need to submit some paperwork to show what was expected and what was received.
Protect your purchase with various benefits
Top credit cards also come with complimentary insurance. These are the common ones.
Extended warranty and purchase protection
Your credit card may even protect expensive appliances and technology, such as a laptop or a TV. Many premium cards will replace or repair eligible damaged or stolen items within 120 days if you buy the product using that card, or pay a recurring bill with the credit card.
Travel insurance benefits
The best travel rewards credit cards earn a lot of points when you buy flights, hotels, or rental cars. But they go one step further when you leave home. You can file a claim for trip delay/interruption, trip cancellation, or lost or stolen baggage under certain circumstances, which can significantly reduce the cost of travel when something goes awry. If you show up at an Airbnb that's been double-booked, for example, some credit cards may reimburse the cost of a last-minute hotel or replacement stay.
Cellphone protection
Premium credit cards and certain low- or no-fee cards offer cellphone protection, which allows you to file a claim for reimbursement, replacement, or repair if your covered phone is damaged. You typically need to pay your phone bill on the card that offers this protection, and there are certain requirements for eligibility that you'll need to meet in order to take advantage of this benefit. You'll also see a deductible ranging from $25 to $100, and reimbursement value can go as high as $1,000 per covered claim.
Managing cash flow and budgeting
Responsibly managing your credit card is one of the primary ways where people mess up. To avoid falling into the trap of increasing debt, make sure you understand both topics below.
Track your spending and set a budget
Most people who use credit cards for all of their purchases commit to paying off their cards every month. However you decide to manage your finances, this is the key to coming out ahead with credit cards. If you consistently overspend on your credit cards, cut them up and switch to debit.
Utilizing interest-free periods
We always advise consumers to pay off credit card balances in full every month to avoid incurring high interest rates which can add up very quickly. However, there's one big exception: Zero-interest credit cards, used wisely, can help you pay off a large purchase over time without costing you anything extra.
The best 0% intro APR credit cards offer between 12 to 21 months of no interest. Some provide this benefit on new purchases, others on balance transfers from other credit cards, and the best ones offer zero interest on both. If you need to buy a new refrigerator or pay for a big repair, paying with a credit card can allow you to spread out the repayment over several months instead of taking out a chunk of savings upfront.
Just be sure you make a plan to repay the full amount owed by the time the 0% intro APR runs out, or else you'll start paying a lot more in interest each month. You can usually find this date on your monthly credit card statement.
Accessing exclusive offers and benefits
Credit cards come with some VIP perks and early access opportunities as well. Here are some of the best and most consistent ones.
Sign-up bonuses and welcome offers
Most new credit cards come with the opportunity to earn a little (or a lot) extra when you're first getting started up. Commonly called sign-up bonuses or welcome offers, you'll typically be asked to spend a certain amount of money in order to receive a large one-time bonus of points, miles, or other rewards. Some come in the form of cash back, others come in points, and others offer some type of reward-matching at the end of the year, such as double cash back on all of your first-year rewards.
Airport lounge access
If you travel often, the right credit card can get you into more than 1,500 airport lounges worldwide — for free. Several premium cards let you walk into quiet, VIP sections in hundreds of airports that come with complimentary food, beverages, seating, and rest areas. The best ones even include game rooms, complimentary massages and facials, showers, and more.
Early access to tickets for concerts, shows, sports games and more
Several credit card issuers offer advance access to popular events such as Taylor Swift concerts, football games, sold-out shows, and more. You may also get special discounts or additional rewards for every dollar spent on these events.
Frequently asked questions about paying with a credit card
Should I keep paying with a credit card to earn rewards if I already have credit card debt?
No, you should never chase rewards if you have outstanding debt at high rates of interest. The benefits you can earn from credit card rewards are far outweighed by the high interest rates charged by credit cards, and poor financial habits will tank your credit very quickly. Instead, create a plan to pay down your debt in full — potentially with a 0% interest balance transfer credit card — and set a budget, potentially paying with cash until you can build healthy financial habits.
Is it safe to pay with a credit card online?
Yes, it's safe to pay for purchases online using a credit card. Most credit cards come with fraud liability protection, which keeps you off the hook for purchases you can prove you didn't make.
Are there any downsides to always using a credit card?
Yes, it can be tempting to spend more than you can afford when using a credit card. It's also possible for you to forget your statement due dates and end up incurring interest and late fees. We highly recommend paying your balance in full each month, setting up auto-pay for the minimum amount due on your card each month, and regularly checking your accounts to make sure everything is in order.
What credit card is best for benefits?
The best credit card for you should align with your spending habits and financial goals, whether you want travel rewards, cash back, or low interest rates. You should also decide if you are willing to pay an annual fee for additional card benefits.
Can paying with a credit card lead to debt?
Yes, using a credit card can quickly result in debt if you don't responsibly manage your money and consistently pay off what you owe in full.
How can I maximize the benefits of paying with a credit card?
The best way to maximize your benefits is by using your credit card at every possible payment opportunity unless you need to pay an additional fee. After that, the most important step is to pay off your balance in full every month, and track your rewards so you know if and when they expire.
