Use your credit card for all purchases

What a bold statement, I know, and this may not be right for everyone. However, if you are good with your finances, or can train yourself to have discipline, then I will show you why using your credit card for all your purchases makes complete sense.

Additionally, when using a credit card, you must only charge what you can afford to pay off each month. If you are using your credit card to make unnecessary purchases and go on unplanned shopping sprees, this approach will not work for you.

Here are reasons why you should use your credit card for all purchases, expenses, and bills (ie electricity, cable, and phone).

Your credit card has a 30 day cycle where they calculate your purchases. After your cycle closes, you pay them back after you receive your statement, or bill. Between the time you start charging purchases in the beginning of your statement, and the deadline to pay them back, 30-45 days could elapse. That is a free loan!

• For example, let's say your cycle is between the 15th and 14th of each month. You start your cycle on 4/15 and it closes 5/14. You bill may arrives one week later on 5/21, and it is due on 5/28. That is 5-6 weeks that transpired from your first monthly purchase and the due date - a free loan.

If you charge all of your necessary expenses each month, such as food, insurance, cable bill, gas, etc, you will quickly accumulate points. After a while, those points can be redeemed for:

• Cash
• gift certificates, or
• merchandise.

By carrying a large amount of cash to pay for everyday items, you risk it being stolen. If your wallet is stolen, you cash is gone.

If you have large wads of cash in your pocket, you risk it fallen out. If you credit card is lost or stolen - (a) you immediately call your credit card company, (b) they close your current account, and (c) you will quickly be issued a new card. By using a credit card to purchase your everyday items, you will minimize the risk of losing cash, which is irreplaceable.

• Make sure you have your credit card number and credit card customer service number in a safe place (other than your purse or wallet), so you can call to cancel your card and request a replacement card, in the event your wallet or purse is stolen.

Your credit card bill is an organized summary of your monthly purchases, and easy to track your expenses. When you use cash, you can quickly forget what the heck you spent your money on.

If you charge a service, and the service provider does not deliver, or they provided an unacceptable service, you can dispute the charge on your credit card. For example, let's say you charged $1,500 for a roofing service to replace your roof. The roofers stated in the contract that they would replace any rotten wood with new boards. As you inspected the work, you realized that they are placing the new roof and ice and water shield over your rotten wood!

• Solution: You take pictures, call the credit card company, and dispute the services. Your credit card company will have you fill out dispute paperwork. Meanwhile, I would suggest that you call another (honest) roofer. If you win the dispute, your credit card company will credit you back your $1,500. Your paperwork is sent to the roofing company's merchant bank, and the money is given back to you.

The best part about this - you save yourself the time and hassle of going to small claims court or hiring a lawyer.

The most important thing to remember is - Do not charge what you cannot afford to pay off every month. You need to master the ability to control your expenses. The finance charges will increase your balance by 20 - 30%. Also, make sure to pay your credit card on time! Being late just one day could result in a $39 late fee.

Using your credit card for all of your everyday purchases requires a disciplined approach, and can reward you in the process. Using your credit card is not a free ticket to overspend or spend lavishly, it is a means to organize your finances and expenditures, receive rewards, add buyer protection, and security. $$$