Smart use of credit cards can gain you great benefits, from miles to points for products you would have bought anyway to cashback. Unless you absolutely must, try not to use your credit cards to cover debts you can’t afford.
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Purchases in an Emergency
According to the experts at SoFi, if the purchase is a need and you can make large payments, paying a small amount of interest per the credit card APR calculator can keep you going when funds are low. If you find that you can’t qualify for a 0% APR credit card, you may be headed for problems. You may be able to pay less interest with a SoFi personal loan.
Restaurant Meals
The simplest way to cover the cost of restaurant meals is to cover the cost of food and beverages with the card and cover the tip with cash. This limits the risk of fraud at the till and covers the server payout immediately. Don’t borrow against your next paycheck, however. If you don’t have the dollars to cover the whole meal right now, eat at home.
Online Purchases
Always use a card for online purchases and travel reservations. You will be protected against fraud and there may be a warranty feature offered by your card provider beyond that of the manufacturer. If you earn miles off your credit card, use your card miles and your frequent flier miles to reduce the cost of your next trip!
Cellphone Bills
A simple way to make sure your cellphone is always covered is to link it to a credit card with points or miles that you will use. Recurring bills such as your cell phone, your car insurance or other maintenance debts that don’t charge a fee are easy to connect to a credit card.
Other Debts You Can Cover
There are many experts who recommend not paying for large ticket items, such as your rent or a used car, with a credit card. However, if you have the cash available to cover these debts, such a purchase can make sense and gain you great rewards.
For example, if you have the cash available, buying a car with a new credit card that offers a large mile bonus can earn you free travel to a wonderful destination and 0% interest as long as you pay off the card within the time limit. If you have the cash in your account and pay your rent with a credit card, you may be able to earn free groceries, cashback or points to a retailer you often use every month.
Managing this debt is critical. If you’re not good at saving money or building up your checking account to cover that large credit card bill, don’t do this. If you realize that you need to use that card because you don’t have the cash, it’s time to scale back. Smart credit card use can actually help you manage your debt and cover your needs, but paying interest is not smart credit card use.
