If you’re trying to be responsible with your money, the first step is to avoid using your credit card too much, especially if you’re fairly certain you won’t be able to pay off the balance in full at the end of the month. However, using plastic has its benefits. Credit cards offer purchase protection, fraud protection and other benefits that trump debit cards and cash.
Your credit card offers benefits that you’re likely not aware of. If you’re not familiar with the perks of your credit card, take some time to go online or call customer service and familiarize yourself with the many ways in which using credit can actually help you. Next, take note of these eight items which should be paid for by a credit card.
- Electronics and appliances. It is recommended that you pay for these items with a credit card because the three main card networks – Visa, MasterCard and American Express – offer extended warranties on the things you buy that already come with a warranty. That means that if your new refrigerator has a one-year warranty, your credit card company may extend it to two years or longer. Third is something you should keep in mind, since many items tend to break down right after the warranty expires. Another reason why you should charge electronics and appliances to your credit card is because of price protection. Have you ever bought an iPad or computer and saw the same thing for a lower price the next week? If you bought it with a credit card, you would get refunded the difference. There are time limits to take into consideration, though.
- Online purchases. If you’re wary of buying anything online because of security issues, use your credit card. You’ll be protected in the event that the product you ordered never arrives. This is especially helpful if you tend to buy items from companies from other countries or companies that are newer or smaller and may not be as trustworthy. Plus, credit cards often cover items while they are in the shipping process, so if your couch arrives ripped up or your mirror is broken, you won’t be liable.
- Purchases made over the phone. The ability to shop online has made ordering by phone outdated, but sometimes it’s still a necessity, especially if you’re a business owner and need to special order something. If you’re paying ahead of time, use your credit card to protect you just in case the item never arrives or arrives in less than perfect condition.
- Travel accommodations. Renting a car, booking a flight or reserving a hotelroom? Use your credit card – especially if you have a travel rewards card. The reason why you should use your credit card is because of the perks as well as the convenience. When you use your debit card to rent a car or hotel room, you may be forced to put down a sizable deposit or your credit may even be pulled, which can hurt your credit score. In addition, most credit cards offer rental car insurance, which will protect you in the event of an accident. Many cards also offer trip cancellation insurance, flight protection, baggage protection and even concierge services, so if something happens on your vacation, you could be reimbursed for any damages. Plus, many rewards cards offer bonus points on travel purchases, so it’s a win-win.
- Concert tickets. If you use the right credit card, you can save on concert tickets and even receive special offers. Card issuers such as Citi and American Express offer presale events, VIP offers and even discounts for various concerts.
- Purchases made abroad. When traveling outside of the country, use your credit card. Most cards have no foreign transaction fees, plus since you’ll likely be unfamiliar with many of the retailers you purchase from, you’ll get protected from fraud or any other issues that can occur.
- Service providers. If your hairdresser or contractor accepts credit cards, by all means use them. That way, if you’re not happy with the service, you can always stop payment or file a dispute.
- Tax-deductible items. If you own a business, you know how important it is to have accurate records come tax time. If you want to deduct your gas or supply purchases, you need to have receipts. If you use a credit card to make all your tax-deductible purchases, all you have to do is pull up your statements and voila! No need to hang onto thousands of tiny gas and restaurant receipts.
Credit cards have a bad reputation, but they’re not always bad. They offer protections and other benefits that you won’t get when paying with cash or a debit card. When you use a credit card to purchase the items above, you may have to pay some interest in order to get the item paid off, but in return you get peace of mind.