We all do it; we reach for the same credit card every time for our purchases. Why? A lot of us have just gotten used to the convenience: many bills are auto-paid with this card, the perks are good enough, and it’s already in our wallets. However, there are some disadvantages to using the same card for all your purchases. Here are four things using the same card every time could be costing you.
1. You could be paying too much in interest.
If your preferred card is one you got years ago, you could be paying a higher interest rate than if you used a newer credit card. Your interest rates are calculated based on your credit score at that time, and older cards would’ve been approved based on a higher credit utilization ratio, shorter age of credit, and lower number of accounts. Consequently, your market rate is likely higher on your older cards unless you have renegotiated the terms.
Of course, you can avoid paying interest altogether by paying off your balances in full every month. If that feels impossible at the moment, you could use a debt consolidation loan to transfer your balances to a loan or credit card with a lower interest rate.
2. You’re missing out on new sign-up bonuses.
Credit is very easy to get in the United States if you have a credit score that ranges from average to excellent. Because credit is so readily available, card companies spend a lot of money creating tempting offers for new credit holders to pick their cards above others.
New sign-up bonuses run the gamut in terms of offers, but you should expect to see things like 0% promotional APRs, $0 fees, bonus miles or reward points, and new travel or shopping perks.
3. There could be better ways to optimize your spending.
Speaking of perks, you could be getting even more bang for your buck by using the right credit card for specific purchases. There are credit cards with rewards specifically tailored to those who travel, business owners, or big-ticket spenders. But you don’t need to be wealthy to take advantage of card benefits. Check to see if your other cards have special perks for using them on things like gas, groceries, or streaming services. Then, use each card for the purchases in the specific categories in which it offers rewards.
4. Merchants could be charging you more.
Retailers are charged a percentage of every sale on purchases made with credit cards. The rate varies based on the card used, and these fees are generally passed back to you with either a service charge or an increase in the base price of the item you’re purchasing. If you’re using a card that charges merchants a higher percentage, i.e., American Express, you may be paying more than someone using a Visa for the same item. Luckily, this is rare for larger companies and e-commerce sites, but it can still happen in smaller or locally-owned businesses that have less negotiating power with credit card companies.
The bottom line
Choosing habit and convenience instead of optimizing your purchases might feel fine in the short term, but you’re potentially missing out on some great benefits. Give these four reasons some thought before your next shopping spree to see if there’s a way you can get even more benefit from the things you already buy.