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What Should You Use Your Credit Card For?

Greg Sandler • November 21, 2023

Credit cards are powerful pieces of plastic that can help you with everything from building credit history and increasing purchasing power to potentially earning rewards and protecting against fraud.

The average U.S. adult has four credit cards1, and 73% of Americans have opened a credit card account by the time they are 25 years old.Using credit cards responsibly requires an understanding of how they can add value to your wallet.

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Benefits of using your credit card daily

Using credit cards can provide financial freedom and convenience. Benefits of a credit card include:

  • Building credit: Using your credit card responsibly and paying your bills on time helps build a positive credit history. This track record can help you obtain lower interest rates on loans in the future.
  • Making large purchases: Paying with a credit card can provide a convenient way to make a large purchase, such as buying a new appliance or putting a deposit on a vacation rental.
  • Earning rewards: Some credit cards offer rewards programs that enable you to earn points or cash back on your purchases. Rewards can be redeemed for travel, merchandise, or credit on your account.
  • Protecting you from scams: Some credit cards offer fraud and purchase protection features that may help you get your money back in the event of unauthorized use or a problem with a product or service you purchase.
  • Tracking your purchases: Credit card statements make it easy to track your spending, which can help you manage your finances.

When to use your credit card

Credit cards make sense for travel, online purchases, streaming services, tickets, groceries, phone bills, and business expenses.3. Here are some of the best ways to use your credit card:


Using a credit card for travel is often essential for booking flights, hotels, and rental cars. Credit cards are often required as a guarantee of payment or security deposit. When you make a reservation using a credit card, the company is assured that you can pay for the stay or rental.

Find out if you can rent a car with a debit card.

Credit cards can also be used to pay for other expenses, such as meals. In addition to ease of use, credit card statements provide a consolidated record of your expenses. Using a credit card payment also enables you to defer payment until your statement is due or to pay for large purchases in installments.

Some credit cards also offer free travel insurance benefits that cover unexpected problems, like trip cancellations or lost baggage. Credit cards can be convenient for overseas travel, particularly if you use one that does not charge foreign transaction fees.

Online purchases

Making online purchases with a credit card can provide additional protection. For example, if your credit card information is stolen, you are not liable for any unauthorized charges. Some credit card companies also offer rewards for online purchases.

Streaming platforms

Many streaming services, like Netflix and Hulu, accept credit cards. Paying for streaming subscriptions with a credit card can be a convenient way to manage your entertainment expenses and keep track of upcoming charges.

Tickets for events

You can also use credit cards to pay for tickets to a concert, sporting event, or other experience, particularly if you can earn rewards on your purchase. There are many types of credit cards available, so it’s important to choose benefit options that align with your spending and reward priorities.


Many households spend a significant amount on groceries, so using a credit card with a cash back rewards program can save you plenty of money.

Utility bills

If you pay your phone, electric, heat, and water bills online with a credit card, you can set up automatic payments, which can help you avoid late fees if you forget about the electricity bill for one month.

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Deciding between credit and debit cards

Credit cards and debit cards are both convenient ways to make purchases, but they have different features and benefits. Here’s a quick overview of when to use each type of card:

When to use your credit card

  • For purchases you can afford to pay off in full each month. Credit cards offer a grace period, which means you won’t be charged interest if you pay your balance in full by the due date. This can be a helpful way to earn rewards on your purchases without paying extra fees.
  • For fraud protection. Credit cards typically offer better fraud protection than debit cards. You’re usually not liable for fraudulent charges if your credit card is lost or stolen.
  • For building your credit history. If you’re new to credit, using your credit card responsibly can help you build a positive credit history.
  • For rewards. As you gain experience, use your credit card as much as possible, especially in purchase types and categories where you can maximize rewards. For example, consider getting a travel rewards credit card if you often travel.

When to use your debit card

  • For purchases you want to make immediately. When you use your debit card, the money is immediately deducted from your checking account. This can be a convenient way to avoid overspending because you can’t spend more money than you have.
  • For ATM withdrawals. You can use your debit card to withdraw cash from ATMs. However, be aware that you may be charged a fee for ATM withdrawals.
  • For avoiding fees. Many credit cards charge an annual fee, but there is no cost for debit cards. There’s also no fee for withdrawing cash using your debit card at your bank’s ATM.

The impact of credit card use on your credit score

Using a credit card can help you improve your credit score and demonstrate to lenders that you are a reliable borrower. Credit cards can impact credit scores in multiple ways, both positive and negative. Some of the key factors are:

  • Payment history: The most significant factor for improving your credit score is to make all of your credit card payments on time and in full. Credit scoring models weigh payment history more heavily than any other factor, so avoiding late payments is crucial.4
  • Credit utilization ratio: Your credit utilization ratio is the amount of credit you’re using divided by your total available credit. A lower credit utilization ratio is better for your credit score. Experts recommend keeping your credit utilization ratio below 30%.5
  • Length of credit history: The longer your credit history, the better. Lenders see a longer credit history as a key indicator that you’re a more experienced borrower.6
  • New credit inquiries: When you apply for a new credit card, a hard inquiry is placed on your credit report. Hard inquiries can temporarily lower your credit score by a few points.7

Negative credit behavior

If you use a credit card irresponsibly, it can damage your credit score. For instance, making late payments or carrying a high balance on your credit card can lower your credit score.

Some red flags to avoid are:

  • High credit balances
  • Late payments
  • Opening too many new credit accounts in a short period of time

Positive credit behavior

By contrast, actions with a positive impact on your credit score include:

  • Paying credit card bills on time – at least the minimum, and ideally the full balance
  • Maintaining a low credit utilization rate
  • Keeping your credit accounts open for a long time

Credit cards can be a powerful tool for building credit, earning rewards, and managing your finances. But take care to use credit cards responsibly to maintain a high credit score. Paying balances in full and on time, keeping your credit ratio utilization below 30%, and monitoring your monthly statements will help you level up your use of credit cards.

Learn how to choose the best credit cards for your financial progress.

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Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

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1 Information from Experian, “What Is the Average Number of Credit Cards per US Consumer?" as of November 7, 2023:

2 Information from Forbes, “Credit Card Statistics and Trends 2023," as of October 30, 2023:

3 Information from Investopedia, “5 Purchases You Should Always Make With a Credit Card" as of as of October 30, 2023:

4 Information from Experian, “What's the Most Important Factor of Your Credit Score? as of October 30, 2023:

5 Information from CNBC, "3 ways to keep your credit utilization low and boost your credit score," as of October 30, 2023:

6 Information from MyFICO, “ What is the Length of Your Credit History?" as of October 30, 2023:

7 Information from U.S. News and World Report, “The Difference Between Hard and Soft Inquiries," as of October 30, 2023:

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