Pros and cons of using a credit card for everyday purchases
Using a credit card for everyday purchases like food shopping and bill payments can help build credit history and, with some credit cards, you can earn rewards on your spending. However, while credit cards can be helpful financial tools, overspending or not meeting minimum monthly payments can negatively impact your credit score.
What are the benefits of using a credit card for everyday purchases?
One of the benefits of credit cards is their convenience. With credit cards, you don’t need to carry cash when shopping, which makes them more convenient for everyday spending. Another benefit is that credit cards allow you to make immediate purchases, even if payday is still a few days away. This flexibility can be especially valuable in emergencies or limited-time deals.
Credit card rewards
Many credit card companies offer you credit card rewards. By using your card, you can earn rewards like air miles, shopper loyalty points or cashback on your everyday purchases. These credit card rewards can help you save money over time, allowing you to get regular discounts on what you buy.
Build credit history
Using a credit card for everyday purchases can positively impact your credit score. To achieve a great score, you must pay off your outstanding monthly balance and avoid missed payments or interest fees. Lenders also notice when you show responsible credit card usage, which can help build credit history.
If you need to know your credit score, you can check it online to help decide if using a credit card will benefit you.
If you need to dispute a purchase, having a credit card can be helpful. If there’s an issue with something you bought, you could put a claim into the credit card company to get your money back, under section 75 of the Consumer Credit Act.
Credit cards also offer fraud protection. If your card is stolen, your credit card provider will support you with unauthorised purchases. If your credit card is lost or stolen you should report it immediately.
What are the disadvantages of using a credit card for everyday purchases?
Credit score damage
Late payments on credit card balances can damage your credit score. Missing a payment or having too much debt hurts your credit rating because it shows unreliable payment behaviour.
Risk of overspending
A drawback of using a credit card is that you don’t physically spend money, making it harder to track your everyday spending and creating the risk of overspending. If you don’t regularly check your account and pay off your balance, you might be surprised by a bill you can’t afford to pay. This can lead to interest fees, credit card debt and negatively affect your credit score.
Interest charges and fees
Your credit card provider will usually charge you interest on your purchases if you don’t pay off your balance in full every month. These interest charges can soon add up and create credit card debt.
Credit cards also have additional costs you’ll need to consider. Late payments might lead to added fees, and some cards can have annual fees. You’ll need to be aware of these additional charges to decide if a credit card is cost-effective for your everyday spending.
You should always check your credit card agreement for information about the interest and other charges your provider may apply.
Getting a credit card for everyday purchases can be a good idea if you can make the monthly repayments and want to build credit history. If you’re considering applying for one, take a look at our range of credit cards available.
Published July 2023
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