Six Reasons to Use Credit Cards for Small Purchases

Almost half of consumers (45 percent) who own rewards credit cards say cash is still king for purchases under $10, according to a new CreditCards.com poll.¹ Debit cards (30 percent) come in second, while credit cards (23 percent) take a distant third place as the payment method of choice for buying inexpensive items. The national survey of 1,000 consumers found that “even the promise of racking up points and miles isn’t enough to convince consumers to pull out a rewards card for every little purchase.” 

However, there are many reasons to use a credit card for small, everyday purchases.  Here are six of them:

1. It's an easy way to build credit.

Using a credit card to make small purchases that you can easily pay off can be a good way to build some credit if you are just starting out or if you have negative marks on your credit history. Responsibility is the name of the game, and it's far easier to responsibly use your card if you're making small purchases, as opposed to larger ones that will take longer to pay off.

This is an especially helpful way to build credit if you don't have any loans to make payments on. In fact, building your credit this way demonstrates that you are a responsible consumer and may help you secure a loan if and when you do need one. Keep your credit card balance low and paid on time while making regular purchases with it, and your credit report will illustrate a consumer who can be counted on to make their payments on other, larger debts.

2. You can earn rewards.

Using your credit card to make smaller purchases is also a good way to get rewards that are offered to customers of particular cards. Rewards, of course, vary from card to card, but there are plenty that will allow you to take advantage when you make a substantial amount of purchases. Rewards may come in the form of cash back, airline miles or other travel-related discounts. If you travel with any regularity, this is an especially good reason to use your credit card frequently.

3. You can carry less cash.

Relying on a credit card for your purchases means you don't have to carry as much cash around with you. This means a lighter, more comfortable wallet, but it also means if you misplace your wallet or it's stolen, you have less at stake. It’s relatively easy to freeze your account to prevent others from using your card.

4. Help reduce your risk in case of fraud.

While most people wouldn’t invite a robbery by carrying large amounts of cash in their pockets or purses, they often don’t consider the risk of carrying a debit card linked to the entire balance in their bank account. Using a debit card for small purchases can be convenient, but if your card is stolen or compromised by fraudsters, your entire account balance could be wiped out. Using a credit card instead of a debit card can limit your exposure to these kinds of risks.²

5. Purchases are easier to track.

As long as you are responsible about keeping your balance low and making your payments on time each month, you can use your credit card like cash, but in a way that's easier to track. If you use cash for all of your minor purchases, you risk not paying close enough attention to the money you're spending and where it's going. Small purchases can add up, and it helps to have a visible record of where your money is going, especially if you're trying to work on a budget for yourself.³ A credit card will give you access to records of all purchases, not unlike a bank statement, and without having to keep track of every receipt for every item or service you pay for.

6. Returns may be easier.

Credit card purchases can make it easier on you if you end up having to return something, particularly if you misplace the receipt. Credit card transactions are easier for retailers to track, so they are more likely to accept a return and give you a refund or store credit if they can connect the purchase to your card. If you paid in cash, but have no receipt, they only have your word to go on, and that may not be good enough.

While there are advantages to using a credit card for small purchases, there are also disadvantages, which should be considered before you decide how you'll be paying. If you're not paying close enough attention, you may overspend. It's a good idea to never make purchases with your credit card that you can't pay off right away, so you’ll avoid paying interest charges on the balance. If you haven't been good about keeping your balance low, you risk going over your limit and being charged extra fees.

If you’re responsible about using credit for small purchases, you can enjoy the advantages listed above and get the most out of your credit cards. Check out these credit card options from Nevada State Bank.

1. https://www.creditcards.com/credit-card-news/poll-pay-by-card.php

2. For more information on “zero liability” for credit cards, see the disclosures on this page: https://www.nsbank.com/personal/borrow/credit-cards/amazing-cash/

3. Click here for a Two Cents article on budgeting.

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC