Credit cards are not bad, even if they have stigma attached to them. That stigma is usually associated with poor spending and financial planning habits, something that we can all better plan for.
Everyone should have at least one or two credit cards, and should be using them often. But what do you buy, when should you use them and why is this of any benefit to you as a consumer? We'll help you better understand.
What to Buy with Credit Cards
For most people, credit cards are simply convenient. Don't go hog wild and splurge on things that you know that you can't afford right now. Instead, assess what things that you can buy that you already have to buy every day. Like food, gas, utility bills and so forth. This common usage will actually help you build a better credit rating so that you can increase your borrowing power.
A list of things to buy should include items that you plan on paying off within the monthly billing cycle to avoid paying interest or other fees and to make use of your growing credit lines.
- Weekly groceries
- Water bill
- Gas bill
- Electric bill
- Cable bill
- Internet bill
- HOA fees
- Car payment
- Cell phone bill
When you responsibly use credit cards, it is reported to the credit agencies. They see this responsible usage and award you points for being well-versed in financial planning and spending. As your score increases, your interest rate will lessen. What's more, you will be able to get increased credit lines, better credit card offers and lower interest rates.
As time passes, you will enter a bracket of more trustworthy borrowers. With discipline, you can actually use credit cards to get your score up to the top of the charts. This will help you get approved at low interest rates on other loans in the future, like car loans and home loans, for example.
What's more, credit card companies often monitor how often you are using your cards. They will randomly increase your credit line over time for responsible buyers. If you are smart and keep your usage levels beneath 33% of your total card limits, you can actually improve your credit score just by using these cards to pay your everyday bills.