3 Reasons to Buy Almost Everything With a Credit Card

Credit cards get a lot of bad press, some of it warranted. After all, credit card companies are merciless in the interest they charge to borrow money. After a credit card's grace period, high purchase APRs usually apply to any unpaid balances, making it harder for cardholders to pay off what they originally borrowed.

But credit cards do have advantages. In fact, so long as a cardholder pays off their card's balance each month, they are one of the best ways to make purchases. If you're on the fence about credit cards, here are three benefits to buying (nearly) everything with one.

1. Earn rewards

Many credit cards earn rewards on every purchase. For instance, the best cash back credit cards give you a percentage of your purchases back, sometimes as much as 5% to 6%. Meanwhile, rewards credit cards let you earn points, which can have high valuations if you redeem them in the right way.

To give you an idea of how much you could earn, let's say you spend $35,000 annually on non-mortgage or rent expenses. Let's also assume this spending is on necessary expenses, too, like food, gas, clothing, and insurance. If you have a credit card that earns a flat 2% back, you would earn $700 annually in cash back. This money is not taxable, so the full $700 could go straight to your bank account.

Of course, there's no such thing as free lunch, and credit card rewards can cost you in other ways. For instance, if credit cards encourage you to spend more than you can pay back, you might rack up credit card debt. Likewise, there's a big debate over whether credit card processing fees hurt small businesses and result in higher prices for consumer goods.

While you should be mindful of these factors, credit card rewards are still a viable way to save money just by choosing your payment method wisely. Consider getting multiple credit cards that earn rewards on different spending categories, so you can maximize rewards on every purchase.

2. Free insurance

Many of the best credit cards come with travel and shopping protection that becomes active when you use the card to cover an eligible purchase.

For example, some cards have an extended warranty that can double the manufacturer's warranty. Others come with purchase protection that can reimburse you for products that are stolen or damaged shortly after you purchase them. Some even have cellphone protection, which will repair or replace your phone if it's damaged or stolen (you often need to pay the bill with the card to be eligible).

Then, there's travel insurance. Many travel credit cards offer coverage for trip interruptions or cancellations. Some will even cover baggage delay, loss, or theft, while still others have rental car collision waivers and emergency evacuation coverage. Again, this is free travel insurance. If you're already paying for travel insurance, this could save you some money on premiums, though check the coverage limits as you might still need to buy extra.

3. Build credit

Credit cards are one of the best -- if not the best -- way to build credit.

Credit card companies report your activities to credit bureaus, who then distill the information into a credit score. Over time, as you make payments in full and by the due date, making sure not to use too much credit at once, you should notice a gradual increase in your credit score.

No matter where you fall on the credit score spectrum, there's a credit card designed for you. Have no credit score? Get a starter credit card. Have bad credit? Get a credit card for bad credit. Have average credit? You guessed it -- there are plenty of credit cards for average credit. Even if you don't want to be the primary holder on a credit card, you can still benefit from one by becoming an authorized user.

Again, if you're paying your balances off regularly, these cards can help you improve your credit, which can then help you qualify for apartments and mortgages, and sometimes even lower insurance rates.

All things considered, buying nearly everything with a credit card can save you money over the long run by helping you earn rewards, covering your tracks with insurance, and helping you build credit. While using debit cards and cash could come in handy for some purchases -- gas prices are sometimes slightly cheaper when you pay in cash, for example -- credit cards leave you with more to be gained. Take a look at the best credit cards on the market today and see what benefits you can snag.