3 Big Reasons to Make Small Purchases With Your Credit Card

Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend.

spending money
Sasun Bughdaryan / Shutterstock.com

For small purchases, cash remains king, a recent CreditCards.com survey shows. But paying with physical dollars and cents can sometimes be a mistake.

The survey found that 45 percent of adults in the U.S. who have rewards credit cards opt to pay cash for items under $10.

That means these folks are passing up opportunities to earn rewards and missing out on other advantages of credit cards — including consumer protections.

Whether you should pay with credit or cash, however, ultimately depends on your financial situation. So, let’s take a closer look at which payment methods best suit which types of consumers.

When cash is better

Carrying a credit card balance is costly. You’ll likely pay interest on that debt for as long as you carry it.

So, if you’re trying to get out of debt, it’s generally best to pay for things with cash, checks or debit cards. Putting even small purchases on a credit card will add to your debt — and interest payments.

If you carry credit card debt but paying cash is not an option, use a credit card that has the lowest interest rate you can get rather than the best rewards you can find.

Use a free online resource such as Money Talks News’ credit card search tool to quickly find the right card for you. Select “0% APR” from the menu on the left to narrow the results to cards with zero-percent interest rates.

3 reasons credit is better

If you pay off your credit card bill in full each month, you don’t pay interest. If that’s the case for you, it’s generally smart to take advantage of credit’s benefits — which you’ll reap even when making small purchases.

The benefits of paying with a credit card include:

  1. Rewards: Credit card rewards are as plentiful as ever. To see for yourself, just look at Money Talks News’ credit card tool — specifically, select an option like “Travel Rewards,” “Cash Back” or “Gas Rewards” from the menu on the left.
  2. Protections: Thanks to federal laws, credit cards generally offer stronger fraud protection than debit cards, which we detail in “7 Ways to Guard Your Wallet — and Identity — When Shopping Online.”
  3. Credit: Using credit cards responsibly helps you build good credit. For more help with that, check out “Boost Your Credit Score Fast With These 7 Moves.”

What’s your preferred payment method for small purchases? Let us know why by leaving a comment below or on Facebook.

Get smarter with your money!

Want the best money-news and tips to help you make more and spend less? Then sign up for the free Money Talks Newsletter to receive daily updates of personal finance news and advice, delivered straight to your inbox. Sign up for our free newsletter today.