Potential drawbacks of using a credit card for purchases
While there are plenty of benefits to using a credit card, it’s important to keep a few things in mind:
Risk of overspending
The ease of swiping a credit card (or auto-filling your credit card details online) may lead to overspending. If you want to use your credit card for most purchases, it can help to set and stick to a budget.
Interest charges
If you carry a balance from month to month, interest charges can quickly add up. In general, the better your credit, the lower the annual percentage rate (APR) you can qualify for on a credit card.
Impact on credit utilization
Credit utilization (the percentage of your total available credit that you’re using) is an important credit scoring factor. Carrying a balance on 1 or more credit cards can increase your utilization, which can negatively impact your credit.
What purchases should you put on your credit card?
It may make sense to charge certain purchases to a credit card, rather than using a debit card or other payment method. Those include:
Recurring and everyday expenses
Using your credit card for everyday purchases, such as streaming subscriptions or grocery deliveries, can help simplify your finances. Plus, some credit cards may let you earn points or miles on those purchases.
Online shopping
Most credit cards offer $0 liability for fraudulent charges, making them a good choice for online transactions.
Travel expenses
Some travel credit cards could enhance your travel experience, from earning extra miles on hotel bookings to enjoying perks like a free checked bag or priority boarding on a particular airline.
What purchases should you avoid putting on your credit card?
Some expenses may not be ideal for credit card use. You might consider using another payment method in the following situations:
Merchants with surcharges
Some retailers charge convenience fees for credit card payments. Those typically only apply when credit cards aren’t the merchant’s standard payment method. In that case, paying with cash or a debit card might save you money.
Major expenses you can’t repay quickly
If you need to make a large purchase that will take months to repay, the accruing interest could outweigh the benefits of using your credit card.
There is an exception to this rule: If you qualify for a credit card with a low intro APR on purchases (and pay off the balance before the intro period ends), you may be able to avoid or minimize interest charges. Introductory periods may last anywhere from 12 to 21 months.
Tips to help you avoid credit card debt
If you decide to use your credit card for most of your purchases, these tips may help you avoid financial pitfalls:
Sign up for autopay
Many credit card issuers allow you to sign up for automatic payments. You can usually select from a few payment options, such as paying your statement balance, your minimum payment or another amount. This tool can help you keep up with payments and avoid late fees and penalty APRs while controlling your balances. Just be sure you have enough money in your linked bank account to cover payments.
Pay in full each month
Paying your balance in full each month can help you avoid interest charges. This can also help keep your credit utilization low.
Monitor spending
Regularly review your credit card statements to track expenses, spot errors and help ensure you stay within your budget. A budgeting app can also help, allowing you to see your spending across several cards.
Use a card that aligns with your spending habits
Consider using a rewards credit card that aligns with your spending habits. For example, you might pick a credit card that lets you earn points on grocery purchases or miles for travel purchases. Keep an eye out for fees, such as annual fees, to ensure that you’ll get good value out of that card.
Using a credit card can allow you to conveniently pay for everyday expenses while potentially earning points or miles. Once you start paying with credit cards, setting up guardrails, like signing up for autopay and monitoring spending, can help you make the most of your cards.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
