There are a lot of people who hate credit cards because of the debt that they have helped get people into through their use. On the other hand, there are others that love them due to the advantages credit cards offer. What’s important to remember is that credit cards can either be an asset or a burden depending on how you use them. Here are ten times it makes sense to use your credit card rather than alternative payment methods.
Purchases You Can Pay Off
Many people are wary of using credit cards, and they have a good reason. It’s very easy to fall into credit card debt because it’s so easy to swipe your card without thinking of the long term effects. Despite the negative impact credit card purchases can bring when not used wisely, they can be beneficial. In fact, it makes sense to make almost all purchases on a credit card if you know that you can pay it off in full so that you won’t carry a balance. Credit cards are simply give you more protections than cash or debit cards, but you should never use this as an excuse to charge items you can’t afford.
Many people currently prefer to do shopping online instead of in person, and when it comes to online shopping, a credit card is safer than using a debit card or PayPal. Your PayPal account and debit card are linked to your bank account, and this makes it possible for someone to steal your information. Most credit cards have protection against online theft. They also have built-in protection for purchased items that are lost, stolen, or damaged.
Big Ticket Items
A lot of people will say that any “big ticket item” should be paid for in cash. While this is an acceptable option – and one many vendors probably prefer – using a credit card offers additional protection. If your big ticket item, regardless of what it may be, is defective, you have the right to dispute the transaction when you use a credit card. Additionally, some credit cards offer insurance on items purchased on their card and extended warranties beyond what’s available from the manufacturer.
Purchases With Required Deposits
Some businesses require a security deposit when you schedule an appointment or plan to rent an item. Credit cards are ideal for these types of purchases. The security deposit is refunded or the hold is taken off your card once you show up for the appointment or rental. By using a credit card, you’re not losing any money. If you use a debit card, you run the risk of having that money withdrawn from your account, and if you don’t have the amount in your account, you’ll have to deal with overdraft fees or a negative balance. Even if your final payment method isn’t through a credit card, using the card for the security deposit makes sense.
Buy Now, Pickup Later
Several companies offer you the ability to purchase something immediately and pick it up or have it delivered at a later date. It’s a convenient service, but sometimes things don’t go according to plan and you have to delay the pick up or delivery date. Paying in cash or through a debit card doesn’t offer you protection or disputation rights. A credit card will.
Most airlines offer travel insurance when you buy your ticket, but it’s usually an additional cost. Some credit cards offers travel insurance automatically. The credit card may also cover such things as refunds for cancelled flights, emergency services, covering baggage loss, accidental death coverage, concierge services, money back incentives, or hotel and rental car discounts. Of course, this varies by card so you need to check exactly what your credit card will and won’t cover, but using a credit card for airline tickets makes sense in most cases. Airline credit cards can also help you earn free flights while you get these added benefits.
Hotel Reservations and Car Rentals
Some hotels and rental car companies require that you have a credit card in order to reserve their services. While they might take cash for a final payment, a credit card is usually used for a security deposit. Some may take a debit card, but they will take the money out of the account meaning that you can’t use if for other things and you have little repercussions if there is any dispute. There are also hotel credit cards that can provide discounts and perks for using them that you can’t get with other payment options.
Service Provider Purchases
When hiring contractors, it’s smart to use a credit card instead of paying by check, cash, or debit card. Like many items on this list, paying by credit card offers your protection if you’re ultimately unhappy with the provided service. If you need to dispute an issue with the merchant, your credit card company will allow you to do so. For instance, if you pay by cash and learn that the project wasn’t fully completed, you might have a hard time disputing the job. Your credit card gives you a bit of added protection against these issues.
Depending on your card, you might be exempt from paying certain foreign purchase fees on international transactions. Exchange rate fees or international purchase fees can be as high as 5%, so avoiding them is a great bonus. Additionally, many credit cards cover foreign purchases to protect you from fraud or damage while traveling.
Have you ever bought a fragile item only to accidentally break it when you got home? It’s an awful feeling, isn’t it? Most of the time, the item’s warranty won’t cover accidental damage, so you lose out. Most credit cards cover this type of damage, reimbursing the price or replacing the item.
Ultimately you decide whether you use a credit card to your benefit or your detriment. There are certainly times when a credit card offers you more protection than other forms of payment, and if you learn to pay it off in full each month, you can take advantage of these perks and protections.
(Photo courtesy of Wonderlane)