When Should You Use a Credit Card?

Kelly Hernandez
A man using his credit card at a pay terminal.

You researched several credit card options, chose the best credit card for you, and completed the application process. Upon approval, your shiny new credit card was sent to your home and now it sits in your wallet, waiting for action. Your credit card can be a useful financial tool that increases your purchasing power and builds your credit history. However, if used irresponsibly, a credit card will throw you into serious debt, ruin your credit score for years, and make it nearly impossible to achieve your financial goals.

It’s important to develop a solid strategy and implement rules about using your credit card. By strategically using your credit card and developing responsible spending habits, you can increase your credit score and benefit from other credit card perks, such as rewards and purchase protection.

If you’re not sure which purchases should be placed on your card and which you should pay for out of pocket, review the following suggestions. By choosing your credit card transactions wisely, you can use this new financial tool to your advantage and stay on the path to reaching your financial goals.

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Expensive Items

If you’re in the market for an expensive purchase, such as a new television or furniture, it may feel intimidating to pull out your credit card at checkout. However, your purchase may be protected if you pay with your card. Many credit card companies offer purchase protection on big-ticket items, including fraud protection. You can review your statement and ensure the large purchase total is correct. If an error was made, you can dispute the charge with your company.

In some cases, your credit card may also offer automatic warranties on certain expensive items. Review your credit card terms to see if your card provides extended warranties on these items and consider using it as your payment method to widen your warranty coverage.

If your credit card is associated with a rewards program, putting these expensive items on your card is also beneficial. You can rack up a ton of rewards points by increasing your credit card balance and these points can usually be cashed in for vacations, gift cards, or cash back.

While there are perks to purchasing big-ticket items on your credit card, it’s important to develop a realistic plan for paying off your credit card balance. Ideally, you’ll be able to pay off the balance at the end of the month. If that’s not feasible, be aggressive about paying down your balance. Making the minimum payment allows your balance to continue increasing, negatively affecting your credit score and making it impossible to get out debt.


While you may be able to pay for your weekly groceries out of pocket, consider using your credit card for this recurring expense. If your credit card offers a rewards program, you may earn more rewards when you purchase groceries.

For example, a credit card rewards program may offer one reward point for every dollar spent on regular purchases, but two reward points for every dollar spent at the supermarket. Review your credit card’s rewards program terms and conditions to find out what types of purchases offer higher rewards and if groceries get you more points, pull out your card at checkout.

Your local grocery store may offer its own credit card. If you frequently shop at the store, it may be beneficial for you to apply for the card. Supermarkets are known for offering a generous rewards program to shoppers who use their credit cards in the store. By using a supermarket credit card for your groceries, you may qualify for exclusive discounts on items or free groceries.

Travel Expenses

If you’re planning a trip in advance, consider booking your hotel or lodging with your credit card. Most of these facilities request a credit card so they can hold your reservation. When you use your card to book, it’s easier to modify, cancel, or confirm your reservations.

Check your credit card’s terms and conditions before you use it for additional travel expenses, such as airfare. Many credit card companies offer built-in travel insurance coverage on purchases made with the card. This could include additional rental car coverage or cancellation coverage.

Your credit card rewards program may include additional rewards points for travel purchases. When you make travel-related purchases with your card, you may be able to earn reward points faster and cash them in for free travel perks in the future.

Recurring Expenses

Your monthly recurring expenses, such as your cell phone bill or utility bill, can be tough to keep track of and pay on time every month. When you use a credit card for these monthly bills, you usually have the option to set up automatic payments. This allows the company to automatically make the monthly payments for these recurring expenses on their due dates.

When you set your credit card up for automatic payments, you don’t have to worry about forgetting to pay these bills. Automatic credit card payments help you avoid unnecessary late fees. Before you set up automatic payments, review your budget and credit limit to ensure you’ll remain in good standing after these recurring expenses are deducted.


Your landlord or property management company may allow you to pay rent with a credit card. If you own your home, your mortgage lender may also allow you to pay your mortgage with a credit card. If this is the case, it may be beneficial to use your card for this monthly expense.

You can set up automatic payments to ensure your rent or mortgage payment is never late. This helps build your credit and allows you to avoid late fees or other penalties.

Your monthly rent or mortgage payment may be the biggest recurring expense you have. By using your credit card for this payment, you can rack up reward points quickly, allowing you to cash in for a balance credit or other rewards.

When you develop a strategy for using your credit card, it helps build your credit and may earn you rewards points. By sticking to this strategy and implementing responsible spending habits, your credit card can become a vital tool in reaching your financial goals.

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