Once upon a time it was rare to see someone pay for their morning coffee with a credit card. While granted that was before a cup of coffee cost $3, most Americans eschewed using plastic for smaller purchases.
A new survey shows 17% people typically use credit cards for in-person purchases of $5 or less - up from just 11% from a similar survey last year. Also, according to the CreditCards.com survey, the number of cardholders who prefer cash — 55% — and debit cards — 24% — for small transactions each fell by 3% since last year.
While the practice may seem ripe for debt to creep into one's life, experts agree there a benefits.
"Using a credit card - for large or small purchases - is not a license to spend," said Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network. "Rather, it is a convenience that helps build a credit profile. The key is to charge only what you can pay off in full, and on time, each month."
Gallegos said if someone tracks spending, works with a simple budget, and prioritizes paying credit card bills in full and on time, charging smaller items is fine.
"Some common advice about using credit cards is often misguided," added David Waldrop, president at Bridgeview Capital Advisors. "Some suggest avoiding credit cards completely due to the potential to get overextended and caught in a debt trap."
While Waldrop agrees the problems of having too much credit card debt should not be underestimated — i.e. high interest charges, late fees — and damaged credit is serious, it doesn't mean you should swear off credit cards entirely.
"My advice is that you become the credit card company's worst customer," Waldrop said. "If you pay off your balance each month you won't pay a dime in interest. Pay on time and you'll never pay a late fee. Keep your balance well under the credit limit and you'll be viewed positively by the credit reporting agencies."
There also is a case to be made for using credit cards because of their convenience, safety and ability to keep you on budget, said Bob Shoyhet with Melillo Consulting. While one needs to keep from overspending, credit cards actually keep many from overspending.
"Credit cards make it much easier to spend the exact amount you need," Shoyhet said. "Rather than use ATMs for cash, which is certain to be spent faster and often without remembering how it disappeared and for what purpose, it's simpler to pay a few dollars for a cup of coffee with a card and spend nothing else."
He added credit cards help organize and prioritize finances via the use of direct links to budgeting programs which will keep your spending habits in check.
"Plus their advantage is around the issue of security," he said. "If you lost a $20 bill it is gone forever, but if you lose a credit card it may be inconvenient, but not concerning. One call to your credit card company to report it missing is all it takes to have it blocked and any false charges reversed. You haven't lost a single penny."
Gallegos agrees, adding credit cards are a better choice to use for online purchases — even small ones — as it offers greater protection against fraud.
"If you need to dispute a transaction, you can report it to the card issuer," Gallegos said. "You are not liable for the charge until the dispute is resolved."
And while using your card may come with its advantages, Gallegos warns overspending still can be an issue, although technology has made it easier to keep track of what you spend.
"It is all too easy to overspend with a credit card," he said. "To prevent, keep receipts and a daily log of expenses versus budget. Today, it is easy to see charges online in your account."