We’ve previously talked about whether or not you should use credit cards for routine purchases, including looking at some of the benefits (like increased rewards points) and some of the risks (like the greater risk of going into debt). But are you really sure how to weigh those risks versus rewards? The potential of going into debt, for example, will be much greater for some people than others. Where do you fall in that spectrum?

Now we’ll talk more about some of the specific questions you should ask yourself before deciding if charging your everyday purchases is right for you.

The Scenario

You have a rewards card (let’s say it’s a frequent flyer card like the American Express Blue Sky credit card). You really wish you could earn more rewards points to put towards that vacation you’ve been saving for. However, you’re not willing to finance unnecessary larger purchases to do it (good for you!). You figure the only way you can really increase your frequent flyer points is to use the card for routine purchases like petrol, groceries, or paying monthly bills (which you normally pay with cash or a cheque). You figure, “heck, I can always pay those charges off at the end of the month.”

You would be right. That’s the ideal circumstance — you pay off your charges every month, collect rewards points, and never spend above your means. But “ideal” doesn’t always translate to reality. Before deciding whether or not you should start using your credit card for everyday expenses, here are some things you should ask yourself.

The Questions

1.    Do I already have a lot of debt? (If so, you might not want to even temporarily increase your debt-to-credit ratio.)

2.    Would charging everyday expenses mean that I’m sacrificing my emergency fund on the credit card until it’s paid off? (That could be another reason to leave your balance untouched.)

3.    Am I the “out of sight, out of mind” type who might charge the routine expenses and then spend my money on something else before paying them back, thinking “there’s always later?” (If that sounds like you, stick to paying off your routine expenses outright.)

4.    Will paying with plastic entice me to spend more on things like fuel and groceries than I otherwise would? (Those extra rewards points might not be worth tacking on extra monthly expenses.)

If you answered “no” to all of the questions above, there’s a better chance you’ll be in that ideal group — earning more frequent flyer points without disrupting your budget. If you answered “yes” to any of them, think long and hard about it before using your credit card to pay the next time you fuel up the car. Just think of it this way: rather than take a risk of spending too much or going into debt, wouldn’t you be better off just setting that money aside and putting it directly towards your vacation? Probably.