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Americans shun credit cards, but there are good reasons to keep charging

The share of Americans who don't use credit cards is climbing, but those who do use cards are doing a better job at managing them, according to a recent Gallup poll. Having a credit card helps you build credit and track expenses, among other perks. 

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    A coffee shop displays signs for Visa, MasterCard and Discover, in Washington. Despite its many advantages, credit card use is falling fast among American consumers.
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The number of Americans without any credit card at all has climbed – 29% were plastic-free in 2014, compared with 22% in 2008, according to a Gallup poll.

“This suggests that credit cards—a staple of American consumer life for decades—might not be as vital a financial tool to individuals as they had been in the 1990s and 2000s,” the research site said.

What’s more, Americans who do own cards are doing a better job of managing them, according to the data.

“They are carrying less credit card debt overall, own fewer cards and are more likely now to say they always or usually pay their full balances every month,” Gallup said in the April 2014 poll.

I’m encouraged by those trends. And I’d remind those who don’t use a credit card: Although they can be dangerous in uneducated hands, they can be quite beneficial when used responsibly.

Here are three reasons why you should charge it.

It helps you build your credit

If you pay your essential expenses and everyday purchases with a credit card and pay off the balance in full each month, this will help you build your credit. Paying off the entire balance each month shows you can be trusted with credit. Card issuers will then be more likely to extend additional credit to you.

Good credit habits include paying your bills on time—even in advance of their due date, according to NerdWallet.

Every month you have to pay basic expenses, such as cable, cellphone, Internet, groceries, gas and car insurance. How do you pay these bills now?

Perhaps you send individual checks by mail. Or maybe you pay online with a debit to yourbank account. Try putting those bills to work for you. Put them on your credit card, and – again — never forget to pay off the card in full each month.

Here’s what you stand to gain.

You can get something for almost nothing

My favorite reason to charge it is that if you plan properly you can get something for virtually nothing. My wife, our son and I live in San Diego. We travel to Indianapolis, where I grew up, to visit my family a couple of times a year. Often a flight is free, or maybe two, simply because of the rewards program on our credit card.

Not all cards are created equal. If you decide you would like to start paying all your essential bills with a credit card each month, take a moment to figure out what rewards you would benefit from the most. If you travel frequently, you may want to find a card that offers points you can apply toward flights and hotels. If you don’t travel, you may prefer cash back.

To figure out which card might be best for you, check out NerdWallet’s best rewards credit cards.

As you hone in on the optimal card, pay attention to any annual fees you will pay. If the fee is high, the rewards you earn through the year may be a wash.

You get help tracking expenses

Using a credit card means you have protection against fraud and misuse of the card. Also, it can help you keep better track of your expenses and stick to a budget.

You can monitor spending categories, such as restaurants, coffee shops, clothing and entertainment. Once you have that information, you’ll have a better idea about where you may want to reduce spending.

Learn more about Scott at NerdWallet’s Ask an Advisor.

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

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