Why nearly every purchase should be on a credit card
Editor's Note
Credit cards add a lot of convenience to our lives, and when used responsibly, they can be a very powerful financial tool. In fact, we would argue that most, if not all, purchases should be made with a credit card. Here are some reasons why.
Building credit
A strong credit score is one of the keys to a secure financial future, and using a credit card can help you build credit. The key is to make regular purchases with your card before paying off your balance in full each month. With your monthly payments reported to the credit bureau, potential lenders will see that you're a responsible borrower.
Making all of your purchases on a single credit card can also help you monitor your spending, as you can view all of your transactions in one place.
Related: The best first credit cards
Earning rewards
A credit card can be a great way to earn rewards through cash back or travel points and miles. Some cards, such as the Citi Double Cash® Card (see rates and fees), earn a flat percentage of cash back. Other cards, like the Chase Freedom Flex® (see rates and fees), offer rotating bonus cash-back categories.
There are also cards, like the American Express® Gold Card, with consistent bonus-earning rates in select categories, such as dining, airfare and groceries.
Ideally, many purchases you make will qualify for bonus points. You can even earn bonus rewards when you pay your monthly rent with a Bilt Mastercard®, up to 100,000 points in a calendar year (cardmembers must use the card five times each statement period to earn points).
Just remember that most reward earning is limited to purchase transactions. Cash advances, gift cards and sending money from your credit card through apps like Venmo, Zelle and PayPal don't count.
The information for the Bilt Mastercard has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: How many credit cards should I have?
Welcome offers
Many credit cards come with welcome offers for new cardholders. Offers include large amounts of bonus cash back, points or miles after you spend a certain amount on the card within a specific period. To qualify for a welcome offer, use your card exclusively until you meet the spending requirement.
Related: Here are the best credit card welcome offers
Security
Credit cards offer more security than a debit card or cash can provide. For starters, every credit card offers zero-fraud-liability protection. With a debit card, if your card is used fraudulently, the money comes out of your bank account, and the corresponding fraud investigation can take time to resolve. Plus, there is no guarantee that you will get your money back.
With a credit card, money does not leave your bank account, and you are not responsible for the charges.
I recently had to dispute a purchase that didn't arrive, which I inadvertently made on my debit card. This process took three weeks to resolve. In the past, when I have had to dispute a credit card purchase, it was usually resolved in a couple of days and always in my favor.
Related: How to identify and prevent credit card fraud
Protection and insurance
Many credit cards offer protection and insurance when you make purchases or pay bills with your card. Some popular ones include:
- Purchase protection
- Extended warranty protection
- Baggage delay and lost baggage insurance
- Primary and secondary rental car insurance
- Trip delay and cancellation insurance
- Cellphone protection and insurance
If something goes awry, these protections can give you added peace of mind. Also, they are complimentary, so you receive coverage without paying additional fees (beyond the card's annual fee.)
Related: Best credit cards with travel insurance
Buy now, pay later vs. credit cards
Buy now, pay later plans can seem similar to a credit card at face value. You don't need to have the money available at that moment to cover your entire charge, and if you fail to make on-time, adequate payments, your credit score can suffer and you may be charged late fees.
Unlike credit cards, though, a buy now, pay later plan typically doesn't charge interest unless it's a longer-term plan. That can make it seem appealing for a large purchase. However, I still recommend using a credit card over a buy now, pay later plan.
As I discussed above, making a purchase on a credit card offers added protection and the ability to earn rewards. You won't get that with a buy now, pay later plan.
If you need to make payments over time on a purchase but don't want to rack up hefty interest charges, consider a card with a 0% introductory APR offer instead.
Bottom line
Using a credit card for the majority of your purchases carries several benefits. In addition to helping you build and maintain a good credit score, credit cards offer valuable rewards and purchase security. Some even include generous welcome offers.
Used responsibly, credit cards deliver peace of mind and more money in your pocket.
Related: The best credit cards
For rates and fees of the Amex Gold, click here.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
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- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.