Maximize Your Benefits by Using Credit for All Purchases: Here’s Why It Works
While many finance experts advise limiting credit card usage, there are situations where using your credit card for most purchases can be beneficial, provided you manage your payments responsibly.
**Maximizing Rewards**
Credit cards that offer rewards can provide benefits like airline miles, discounts, and cash back, encouraging their use. GOBankingRates interviewed individuals who use their credit cards for as many expenses as possible to maximize rewards, while also paying off their balances quickly. Here are some advantages of this strategy:
**Travel Points and Perks**
Brodi Cole, who runs the family travel site Our Offbeat Life, has been traveling full-time with her family since 2019. She primarily earns points with Southwest Airlines, which offers flexible flight and hotel options worldwide and has no international transaction fees. Her points don’t expire, and blackout dates are minimal. She spends around $2,000 to $3,000 monthly on her card, aligning with her budget and income, and pays off the balance in full each month, sometimes more frequently for larger purchases.
**Tips for Using Credit Cards Wisely:**
– **Start Small:** Choose a card with lower spending requirements and rewards that match your lifestyle. If you travel less, a cash-back card might be more suitable.
– **Be Budget-Savvy:** Only spend what you can afford and track your expenses using budgeting tools or apps.
– **Avoid Debt:** Rewards are only beneficial if you don’t fall into debt. Paying interest can negate the value of the rewards.
**Business Benefits**
Mark McCalla, owner of Alpine Dog Co, finds that using rewards credit cards for all possible expenses has been transformative, allowing him to maximize returns on every dollar spent. He channels about $10,000 through his rewards cards each month, covering raw materials, inventory, travel, and everyday expenses. This strategy simplifies his financial management and earns substantial rewards, reducing business costs and funding personal vacations.
**Choosing the Right Cards**
McCalla advises selecting cards that align with your spending patterns and offer the best returns for your lifestyle or business needs. Keeping an eye on special offers and bonus categories can significantly boost your rewards earnings. Lionel Pinkhard, general manager at Infinity Curve, suggests choosing a card where you’ll actually use the rewards. For example, a person who doesn’t travel much might benefit more from a cash-back card or one that offers free movies. Many cards have monthly earning limits, so once you reach the limit, switch to a different card.
**Loyalty Brings Greater Rewards**
Pinkhard also uses his credit cards for travel, sticking to the same airline to earn extra rewards. He spends around $10,000 per month on his primary card, which rewards Emirates Skywards miles, and pays off the balance in full each month to avoid interest. His card offers a booster option that increases rewards for a small monthly fee, providing benefits like flight upgrades, lounge access, and chauffeur drives. If you fly frequently, a travel card is beneficial, especially if most flights are with the same airline, as a co-branded card can offer greater rewards.