I ran into the supermarket after work today and picked up a 4L jug of milk.  The total came to $4.09 and the cashier asked if I’d be paying cash or debit.  I saw the disapproving look on her face when I pulled out my credit card to make the purchase.  The look that said, “you’re really going to pay for this with credit?”

It’s become habit for me to use a rewards credit card for my everyday spending.  I earned 12 cents for that milk purchase by using a cash back credit card.  The transaction took only a few seconds with the tap & go PayPass  feature – and there’s no signature required.

Psychological barriers to using credit cards

If you’re in debt, or struggle to use credit responsibly, it makes sense to avoid using credit cards at all costs.  For some people, there’s a psychological barrier that exists when it comes to using credit cards for essentials like groceries, gas and pharmaceuticals.

Related: Annual Fee Credit Cards: When They Make Sense

I get it.  The benefit of using cash or debit is that, unlike with a credit card, you can’t spend what you don’t have.  You can only spend what’s already in your wallet or bank account.  Since the debit or cash transaction is immediate, your account balance is always up to date.

But when you take emotions away and think about this logically, doesn’t it make sense to use the form of payment that gives you the best deal?  Retailers don’t offer discounts for customers who pay in cash, and heavy duty debit card users can end up paying $10 – $20 a month in debit card fees.

The rewards card option

So that leaves us with the rewards card option, which really isn’t sounding so bad now.  I use the MBNA Smart Cash MasterCard for my everyday spending.  This credit card pays 5% cash back on groceries and gas for the first 6 months, and then 2% cash back thereafter (up to a maximum of $600 per month).  You earn 1% cash back on all other spending.

Related: Why Cash Back Beats Travel Rewards

Sure, I’m using credit so the money doesn’t come out of my bank account right away.  But I always pay off my credit card balance in full each month once I receive my statement online.  Some people even pay off the balance immediately after making a purchase.

I spend an average of $2,600 a month on my credit card, and earned more than $500 cash back in my first year using the Smart Cash card.

That sure beats paying $14.95 a month for the privilege of using my debit card.

Groceries, gas and everything in between

Smart consumers are getting the picture and starting to change their purchasing habits.  Rewards credit card use is on the rise as shoppers look to save on bank fees and earn rewards for their everyday spending.

I put groceries on my credit card and earn 2% cash back.  I set up all my recurring bill payments to come off my credit card and earn an additional 1% rebate.  I rarely carry cash, and it’s even more rare when I pay by debit.

And why not?  Even though I get those disapproving looks at the checkout from time to time, I know I’m the one making the smart spending decision.

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