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What Should I Use My Credit Card For?

How often you use your credit card depends on your financial goals and habits, but it’s usually a good idea to use it at least once a year – and for certain major purchases.

By Megan Doyle | American Express Credit Intel Freelance Contributor

7 Min Read | October 1, 2021 in Cards

 

At-A-Glance

If you’re new to credit cards, you might be wondering how often you should use your card, what you should use it for, and what happens if you don’t use it.

The answers aren’t so simple: There are pros and cons to using your credit card for everything – or for nothing at all.

Regardless of how often you choose credit, you may want to consider using a credit card for certain purchases, like big-ticket items and travel.

A credit card can be an invaluable tool. It’s difficult to rent a car or hotel room without one, not to mention the benefits of rewards and building your credit history. But just because you have a credit card doesn’t mean you have to use it all the time. In fact, some people in America rarely use their credit cards. Others, however, use them for virtually all of their purchases – and still others fall somewhere in between. Like so many things in life, there’s no “right answer.”

 
Here are some of the pros and cons of using your cards for everything, what happens if you don’t use your credit card, and what you should always consider buying with a credit card. 

 

Should You Use a Credit Card for All Purchases? 

Though you might run into some limitations if you’re trying to buy a money order or a gift card, it’s possible to use your credit card for just about any purchase. Here are the main advantages and drawbacks to using your credit card for all purchases.


The pros of using your credit card for everything:

  • Maximize rewards potential: The more you use your credit card, the faster you’ll earn points, miles, and/or cash back. Some cards even offer incentives to swipe more, like extra points for using your card 20 times in a month. Just be sure to pay attention to whether your card has a monthly, quarterly, or yearly rewards limit.
  • Boost your credit score: Regularly using your credit card will help you build your credit score, as long as you keep a low credit utilization ratio and pay off your balances on time and in full. For more insight, read “What Affects Your Credit Score?
  • Reduce your fraud liability: Credit cards offer better fraud protection than debit cards.
  • Keep track of purchases: You get an automatically compiled list of purchases that can help you keep track for record-keeping, business purposes, and tax purposes.
  • Budget better: If you use just one credit card for everything, you can get a clear view of how much you spend in any given month.
  • Protect your purchases: Many credit cards offer consumer protection benefits like extended warranties – especially for big-ticket items – when you purchase the item with your card.
  • Convenience: Some people find it easier to swipe-and-go than to carry cash.

The cons of using your credit card for everything:

  • Overspending: Without the necessary discipline, it can be harder to keep track of how much you’ve been spending.
  • Increased credit utilization ratio: If you’re paying for everything on your credit card, you’re using up your available credit, which can have a negative impact on your credit score if you use too much. A common rule of thumb is to use no more than 30% of your available credit.
  • Sometimes you need cash: Not all merchants accept credit cards, and not all accept the same card issuers. You’ll find cash-only restaurants and small businesses from time to time, especially when traveling abroad.
  • Extra fees: Some bill payment services, for example, might charge extra processing fees for credit card payments.
  • Complexity: If you use more than one credit card for your purchases, it can be harder to keep track of your monthly spending.
  • Interest: If you don’t pay your balance in full and on time every month, you’ll have to pay interest.

The bottom line: Using your credit card for all purchases can be a great way to get rewards, boost your credit score, and enjoy benefits unique to credit cards – as long as you use your cards responsibly. The goal is to come out ahead, not fall behind.

 

What Happens if You Don’t Use Your Credit Card? 

Though there are people who use their credit cards for everything, many Americans like to use cash or debit cards.1 Avoiding your credit card isn’t necessarily a bad thing, but never using it can have consequences, too.


The pros of not using your credit card:

  • Less temptation to spend: Without a credit card in your wallet, you might be less tempted to overspend.
  • Keep debt down: Every credit card purchase puts you in a little bit of debt, and interest can accrue quickly if you don’t pay your balance in full each month. If you’re already paying off other debts, putting your credit card on the shelf might help stop you from incurring more.
  • Improved credit utilization ratio: Not using your credit card can help keep your credit utilization ratio down, potentially increasing your credit score.

The cons of not using your credit card:

  • Unnoticed fraud: If you don’t use your credit card regularly, you may not notice fraudulent account activity. However, your card issuer may let you set up an alert to notify you if someone makes a charge above a certain dollar amount.
  • Account closure: There are no rules or standards that determine if and/or when your card issuer will close your account due to inactivity. And if your account is closed, your credit score might go down.
  • Stagnant credit score: If your card isn’t canceled, not using it probably won’t hurt your credit score. But it won’t help it grow, either.
  • Lost rewards: Depending on your card’s terms, your rewards might expire or you might lose accrued rewards due to account inactivity.
  • Wasted money: If your credit card has an annual fee, ideally you want to gain enough rewards to make the fee worth it. Why pay the annual fee for a card you don’t use?

The bottom line: Avoiding your credit card probably won’t help you, unless you’re trying to lower your debt. But it also isn’t likely to hurt you, either – as long as you use it every once in a while. For example, consider using your card at least once a year or for a single, small recurring automated payment, like a streaming service.

 

What to Buy with a Credit Card

No matter how you like to use your credit card, there are some things you may always want to consider purchasing with your credit card:

  • Online purchases: Credit cards have better fraud protection than debit cards, and that’s an online advantage. Plus, some cards offer protection for damages incurred during shipping.
  • Travel: You’ll usually need a credit card for a hotel or rental car. But many credit cards also offer travel insurance and rental car insurance, among other benefits like free checked bags and travel assistance services.
  • Big-ticket items: If your credit card offers purchase protection benefits, using it to pay for appliances, electronics, and other expensive items can often extend your warranty.
  • Stuff that earns rewards: If your card offers a rewards multiplier for certain types of purchases – like 3X or 5X for every dollar spent on gas or restaurants – buying that stuff can build rewards fast. But to me, it’s important to adapt credit card use to my lifestyle and use it to improve my financial situation. If you start to adapt your lifestyle to your credit card, you might end up in financial trouble.

Additional FAQs About Using Credit Cards 

 

Do unused credit cards hurt your credit score?

Generally speaking, no. But your credit score might be dinged if your card issuer closes your account due to inactivity.

 

Is it bad to use most of your credit limit?

It’s bad in the sense that using too much of your available credit can negatively impact your credit score.

 

How much credit should I use?

When possible, try not to use more than 30% of your available credit limit. Keeping your credit utilization ratio lower than 30% can have a positive impact on your credit score.

 

Do you get charged for not using a credit card?

Probably not, but you should check your credit card’s terms just to be sure. Of course, if your card has an annual fee, you are being charged for not using it!

 

The Takeaway

How much you use your credit card is up to you, your needs, and your financial habits. Some people use their cards for everything, others for little or nothing, and either way can be fine. But as long as you avoid interest charges by paying on time, and in full, and keep your credit utilization low, using your credit card can help you earn rewards and boost your credit score.

Megan Doyle

Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

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