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Do you have a credit card that stays nicely tucked inside your wallet, only to be used for purchases or in times of a financial crunch?
It might be justified to keep your credit card only for the above-mentioned reasons, doing so may also mean missing out on some perks and privileges. Using a credit card in order to make day-to-day purchases can have plenty of benefits mainly if it is a reward credit card. In addition to this, using your card for regular spending can also help in building your credit score and provide you extra protection. However, you need to be careful about how much you put on your credit card as well as your ability to clear your outstanding dues responsibly on time.
In this article, we will discuss the benefits of using a credit card for regular purchases.
Utilizing your plastic card for regular purchases in addition to the occasional spending makes sense as there are several major perks associated with it. But keep in mind, you should utilize this financial tool for purchases you would have made anyway, and never for merely availing rewards and other perks. Make sure, you use a credit card as you would utilize cash or debit card on everyday purchases like utility bill payments, groceries, gasoline. Following are some of the major perks of using credit cards:
You may use a debit card for your regular spending as it directly debits money from your bank account but this activity does not go on your credit report. So, if you would like to build credit, then it is advised to utilize a credit card for almost everything and clear your dues every month on or before the payment due date.
The activity of your credit card account like outstanding balances and repayments appear on your credit report and assist in building a credit history. Then, banks or lenders can look at it in order to determine your creditworthiness. If you use your credit card responsibly and make on-time repayments every month then you will contribute to the positive growth of your credit score.
If your wallet gets lost or stolen, any cash you were carrying in your wallet is almost gone forever. But if thieves go on a spending spree with your plastic card, you usually would not be liable for the fraudulent transaction if you report a lost or stolen card to your lender on time. Though it may take some time for sorting out this mess, at least you would not lose even a single penny.
When your credit card is utilized by a thief for fraudulent purchases, it is the card provider who loses money. But, when the debit card is used for fraudulent purchases, the money is directly debited from your bank account. Hence, it’s you who loses the money.
One of the best advantages of using a credit card for regular purchases is the key potential to earn great rewards in terms of cash back or credit points that can be redeemed for hotel reservations, travel booking, shopping, etc. If you utilize a credit card for everyday purchases instead of a debit card and clear your outstanding dues by the payment due date every month, your rewards earning potential significantly increases.
Also, note that some reward credit cards have permanent or bonus categories that enable its card members to earn a higher rate of rewards on some specific purchases (like dining and travel). So, if you will use this financial tool on these purchases, you can easily increase your credit card rewards.
Debit cards generally do not offer any sort of protection on spending. Fortunately, credit cards may offer several types of security features and few safeguards which allow you to save money or protect you from fraud because debit cards and credit cards are covered by two different laws.
With plastic cards, you remain protected from the fraudulent usage of the credit card account and the majority of the lenders in the UAE have a zero-liability policy for fraudulent transactions which simply means you would not be responsible for any purchases made without your consent or knowledge. On the contrary, the protection of debit card is not always as generous and if you notice the fraud transaction too late, you might have to pay the full amount from your pocket. That’s the main reason why many experts recommend using a credit card instead of a debit card for making online purchases because it is much safer if, in case, the information of your credit card is compromised. In addition to this, there are some other benefits that you usually do not find on debit cards. For instance, many credit cards in the UAE offer purchase protection and extended warranty on products or items you purchase using the card.
Credit cards send you statements every month which includes all the transactions you have made throughout the month. It makes it easier for you to track your spending than if you make a transaction using cash. While debit cards also have this functionality, the feature on plastic cards can assist you in making sure you only spend within your budget.
If you have used your credit card only for occasional or big purchases, it can be the biggest adjustment to switch to utilizing a plastic card in place of a debit card for regular purchases. Be sure, you follow the below-mentioned tips on using this financial tool responsibly:
In general, we would recommend using your credit card for everyday purchases because this financial tool is safer to carry than cash and provide stronger protection against fraudulent transactions than a debit card. In addition to this, it helps in building your credit score, allows you to track your spending, and helps you to earn higher rewards without even changing your spending habits.