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By Lois Sullivan
Most people spend money on living expenses on a daily basis. Whether you're picking up lunch, buying groceries or paying your bills, you likely have money coming out of your account regularly. But the card you use to make these everyday purchases might not be giving you the benefits you could get if you chose a different card. Find out what makes a credit card appealing to use on daily expenses, and review these tips on what to look for in a good everyday card.
Credit card companies and lenders might refer to the credit cards they offer as good everyday cards, but this can leave customers wondering what that means. An “everyday card” is a credit card a consumer most often uses for their frequent or regular purchases. These purchases might not be massive, but individual smaller purchases can add up. When you visit a shop and buy something or make an online purchase, which card do you usually use? If you have a default card you reach for, this is likely your everyday spending card.
Not all credit cards offer the same level of benefits, especially for smaller purchases or at certain types of stores. For example, if you're using a credit card that only offers double points on purchases made with a certain airline, this probably isn't the best option when you're buying groceries or gas. You don't have to eliminate the airline-specific card from your rotation, but you can consider a card that offers higher rewards for spending at everyday places instead.
Improve your credit score. Some consumers stick to cash and debit cards for their everyday spending, so the thought of using an everyday credit card might seem foreign. However, if you're disciplined with your finances, having an everyday card can benefit you in a number of ways. Using a credit card regularly and paying it off each month can improve your credit score, which will benefit you throughout your lifetime. A strong credit history can qualify you for lower interest rates on loans and better credit card options.
Earn rewards. When you pay with cash or a debit card, you aren't getting much in return. Cash certainly doesn't come with a rewards program, and few financial institutions offer cash back or other rewards on debit card purchases. By switching to a credit card for everyday purchases, you can maximize the rewards you earn, whether you're getting cash back, miles to use toward travel, statement credits or gift cards. When comparing cards, look for options that offer increased benefits on everyday purchases, such as those made at gas stations, grocery stores and big-box retailers.
Increase security. A credit card is also a safer option than a debit card if the number or card gets compromised. Credit card companies can wipe away fraudulent charges, ensuring you're not responsible for paying them. When someone steals a debit card and goes on a spending spree, it's harder to get the money back into your account. Stolen cash is essentially un-trackable, so you're putting your safety and finances at risk when you carry bills.
Track purchases. Tracking purchases is easier when you use a credit card, as you can review your pending and posted transactions online at any time. If you're trying to stick to a budget, you can easily use the information available in your online account or link the credit card to your online budgeting tool to pull in and categorize expenses automatically.
Now that you understand why an everyday card is worth considering, use these tips to decide which card is right for your financial situation.
Before you sign up for the first credit card you come across, determine where you spend money on a day-to-day basis. Review your credit card or bank statements for the last few months and create categories to figure out where you're spending the most. If your grocery store purchases tend to add up fastest, look for a card that offers extra rewards for spending at this type of store. If you tend to do most of your shopping at one store, it might make sense to consider a card that rewards your loyalty.
Many financial institutions and credit card companies offer cards that make sense for everyday use. It's helpful to compare different offerings to figure out which is the best fit for your financial circumstances. If you have a lower credit score, you might not qualify for every card out there. You can compare what's available to you or apply for a card with a lower credit limit.
Some companies offer cards geared toward a specific niche, such as people who dine out or enjoy entertainment often or individuals with wanderlust who want to earn points to use on travel. But if you don't fit into one of these categories, you can still find a card that meets your needs. Look for an option that offers rewards in various spending categories to help you maximize your returns.
Another factor to consider when choosing an everyday credit card is the interest rate. If you pay off your balance in full each month, the annual percentage rate (APR) isn't much of an issue, as your purchases won't have interest applied. But if you tend to carry a balance or make minimum payments, a high interest rate can cost you a lot each month. Some card companies offer lower introductory rates, such as six months or a year after opening the account, but the rate can skyrocket when that period ends.
Think about your financial habits and whether you'll be paying interest on your everyday purchases. If so, look for a card with a lower APR to keep your costs under control.
Your credit history also factors into the credit cards you qualify for, so review your score to determine where you fall. Any number above 670 is generally seen as good, while 740 to 799 is seen as very good. Your credit score calculation comes from the information presented on your credit report, which is a summary of your debt and repayment history. If your credit score is on the lower end of the spectrum, it might be more difficult to qualify for a credit card.
You can take steps to improve your credit, such as consolidating debt or transferring high-interest balances to reduce the total owed. If you see anything on your credit report that isn't accurate, contact the reporting agencies to dispute the data and have it removed. It's also helpful to avoid missing payments or submitting payments late, as these mistakes can cause your score to decline rapidly.
Alliant offers credit cards with competitive interest rates and appealing rewards. Options include the Visa Signature and the Visa Platinum. Either card is a good fit for everyday purchases. If you have questions about choosing the right card, Alliant can help.
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