Using Credit Cards for Everyday Purchases

More people are using credit for low-dollar purchases, but is it the right choice?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

CreditCards.com recently released their second annual survey of consumers that use credit cards for everyday purchases. The survey aims to estimate at the number of people who use credit cards for purchases of less than $5.

The big result

17% of card users pull out credit cards for everyday purchases of less than $5 made in-person. That’s a notable 11% increase from last year.

The fascinating details

Using credit cards for everyday purchases at the grocery store

Although credit cards usage for everyday purchases is on the rise, cash is still king.

  • 55% of people still prefer to use cash (down 3% from last year)
  • 24% of people use debit (also down 3% from last year)

At the other end of the spectrum, credit cards rule for purchases of more than $500:

  • 57% of people use credit cards for big-ticket purchase
  • 42% combined use checks (8%), debit or cash (10%) for these purchases

The survey also broke credit card usage down by generation. Looking at the data this way revealed Millennials may drive increased credit card use in the future.

  • 53% of Millennials prefer plastic (debit or credit) for small-dollar purchases
  • Meanwhile 70% of Baby Boomers and older Americans prefer cash
  • Gen X falls somewhere into the middle – they’re the most likely to use debit cards

And while more people use credit cards for everyday purchases, many avoid big-ticket purchases altogether. Roughly one in four Americans has not made a purchase over $500 in the past 12 months.

What you can do

“There’s nothing wrong with using credit cards for everyday purchases,” says Gary Herman, President of Consolidated Credit. “As long as you have a strategy in place to manage the debt, you can use credit for any purpose. It only becomes an issue if you don’t pay off your balances in-full each month.”

In many cases, credit card companies give you an incentive to use credit for small purchases. American Express has a popular Everyday® reward credit card that gives you 20% more points if you make 20 purchases in a month. Making 20 large-dollar purchases every month isn’t a good idea; so, it makes sense to use this card for incidentals and trips to the convenience store.

However, as with most reward credit cards, the rewards you earn can be quickly offset by high interest charges. Interest charges get applied anytime you carry a balance over from one month to the next. If you pay off your balance in-full each billing cycle, you avoid interest charges to get the most out of those rewards.

Using credit cards for everyday spending becomes problematic if you can’t maintain a zero balance overall. If you see your balances creeping up, it’s time to stop spending and start reducing your debt. Otherwise, any points or cash back you might earn gets erased once the credit card company applies interest charges.

“At Consolidated Credit we advocate responsible credit use,” Herman continues. “There’s nothing wrong with using credit cards. In many cases, they offer advantages over other purchase methods. However, credit card use and credit card abuse are not the same thing. You have to use your cards strategically in a financially healthy way.”

If you’re working to get ahead of credit card debt, we can help. Call Consolidated Credit at or complete an online application for a free debt analysis from a certified credit counselor.