Having a credit card can make life a whole lot easier, as long as you use it responsibly. You might wonder when you should use your credit card, or go for your debit card. Keep reading to find out the smartest way to use a credit card, and other credit tips and tricks.
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Smartest Way to Use A Credit Card
The smartest way to use a credit card is to be responsible for it. Which means you absolutely must keep track of all of the spending, pay your balance on time and set a sensible credit limit.
You also want to try to maximize your credit card repayments and check your credit card statements regularly. When the time comes, be sure that you close your card properly, in a way that doesn’t harm your credit.
At the same time, you shouldn’t use your credit card for everything. If you can’t afford the balance, a credit card isn’t a solution. You should also think twice before swiping your card if you don’t know how much credit you have. You do not want to get into a habit of having to take out an installment loan just to pay off your credit card bill.
Here are some items you should be putting on that credit card.
1. Appliances and Electronics
It’s time you upgrade to that big screen TV you’ve always had your eye on, and with a credit card, you can do this. A lot of credit cards today even offer complimentary extended warranty for credit card purchases. These programs vary, but it’s a nice cushion if you need to replace or repair an electronic.
There are also credit card companies that provide purchase protection. This means if your item is stolen or lost, or you see the same appliance at a lower price after you bought it, you’re covered.
So if you saw your flatscreen that you just bought full price on sale somewhere else, your card company can refund the difference to your account. When you use your credit card for appliances and electronics, you might find that you end up saving money down the line.
2. Travel Arrangements
Use your credit card to make hotel, flight, and rental car reservations when traveling. Credit cards are perfect for travel because a lot of card companies will give you travel and trip cancelation service for no added charge.
There are even card companies that give you rewards when you use your card to cover expenses for travel. Rewards like free flights, upgrades, discounted car rentals and or hotel stays. You might even get cash back from travel, or concierge services for special discounts on concerts and or sporting events.
If you’re a frequent traveler, it makes sense to shop around to find the card that’s right for you.
3. Tax-Deductible Expenses
When you claim things as tax deductibles, you could end up owing less to the government during tax season. Keeping a record of these purchases can be annoying. If you purchase all your tax deductibles on one credit card, then you have a record right in your credit card statement.
4. Online Purchases
Online shopping, while incredibly convenient, is also a huge risk, since you’re putting personal information on the internet. So paying with a credit card is the safest way to go, as you can dispute charges or fraud without the fear that you’ll never see that money again.
Credit card companies usually have a fraud or identity theft protection, unlike many debit cards. Credit cards often offer “return protection,” which allows you to make a claim if the merchant won’t let you return your item for a refund.
This policy usually extends the amount of time you have to return the item. Meaning if you can’t return an item in the seven-day return policy, you might be able to still file a claim with your credit card company and get your money back within 60 days of your purchase.
5. Recurring Bills and Payments
If you’re good at paying off your credit card in full each month, then you should use it for recurring bills. This way your finances are streamlined, and you know that all of your bills are paid on time, without the fear that your money isn’t in your account.
If you have a cash back rewards program with your card, you might even get more money back for every dollar you charge.
Gas for your car is likely something you’re buying weekly at least. A lot of card companies have high rewards for gas station purchases. It’s also safer to use your credit card at a gas station because gas stations have a high risk of getting your credit card number stolen.
There’s a lot of credit card theft at gas stations because they got a three-year extension on having to install chip readers at pumps. Chip readers make it harder to steal a credit card number or empty accounts of unsuspected customers.
Luckily, credit cards have better fraud protection than debit cards. Your liability with a credit card is at most $50. While with a debit card, you could be liable for $500 of fraudulent activity.
Meals at Restaurants
Another recurring purchase is usually meals at restaurants. Use your card for this too, as many cards have double and even triple bonuses for purchases at restaurants. There are even some cards that offer seasonal cash back of 5% at restaurants.
It’s also a good idea to use a credit card at restaurants because eateries is another common place where you are at a higher risk of fraud. This is because your card is out in plain sight when you pay.
When you buy a meal at a restaurant with your card, you’re risking someone you don’t know to leave the room with your card. Most people don’t even think about this risk, but in reality, gas stations and restaurants are the top two spots where credit cards are commonly stolen.
Use Your Credit Card Smartly Today
Now that you know the smartest way to use a credit card, change the way you use your credit today. Be responsible about your purchases, and always use your credit card in situations where you’re at greater risk of fraud.
For more financial tips, check out our blog.
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How Do You Get Bad Credit? 13 Reasons You May Need a Bad Credit Loan
Is a Personal Loan Right for You? 10 Essential Financial Tips for Millennials
Why You Should Use Personal Loans to Consolidate Debt
Credit and Finance: Personal Loan Versus Credit Card