What Are the Advantages & Disadvantages of Using a Credit Card for Everyday Expenses?


Everyday expenses include purchasing groceries, gas, items at drugstores and paying your basic bills, such as utilities. Some people use a credit card for all of these basic needs, whereas others opt for cash or debit cards instead. The best technique for you depends on your views on debt and whether you pay your card bill in full each month.

Getting Into Debt

If you use a credit card for everyday expenses, the main disadvantage is that you could find yourself getting into debt and facing interest charges on the grocery, gas and bill payments that you made with the card. On the other hand, if you use a debit card or cash, you have to be careful with your spending, buy only what you need at the grocery store and manage the rest of your money wisely so you have enough left for your everyday expenses. If you pay your credit card bill in full every month, using it for everyday expenses is not as harmful as carrying a balance and incurring interest charges.

Earn Rewards

If your credit card offers reward points or cash back, the perk is a major reason for using your card for everyday expenses. Some credit cards offer higher rewards for everyday purchases than for other types of purchases. For example, the American Express Blue Cash card gives you 1 percent back on everyday purchases, as opposed to 0.5 percent for other purchases. After you spend $6,500 during the year, the rate jumps to 5 percent for everyday purchases and 1.25 percent for everything else. Other cards offer 1 percent cash back on most things, but 2 or 3 percent cash back on gas and groceries. However, if you are paying interest on your purchases, this quickly negates any rewards you are getting.

Financial Troubles

If you are having financial difficulties you can still rely on your credit card to put food on the table and get you to work if you use it for everyday expenses. This can be both an advantage and a disadvantage. It is helpful because it is an easy way to borrow when your paychecks aren't covering all your expenses. But it can hurt you if you are maintaining an unsustainable lifestyle instead of cutting back after you experience a loss of income or a major increase in expenses.

Track Spending

If you buy everything on a credit card, you have a paper trail showing how you spent all of your money. This makes it easier for you to calculate how much you spent during the month and then compare it to your budget. However, it also makes it easier to spend more than you budgeted because you are not tracking the spending as you go. If you use a cash envelope system, you would have a more tangible reminder of when you are running out of budgeted money, whereas the credit card allows you to keep spending.

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