Lots of people are afraid of credit cards and swear them off. This is understandable, since, on average, households in the US with credit card debt owe close to $7000. However, if you use your credit card responsibly, follow a budget, and plan your spending, you can reap many rewards by using your credit cards for certain purchases.
Not only that, using a credit card provides a layer of protection not present if you use cash or a check. Keep reading to learn more about the purchases you should always make using a credit card.
1. Big-Ticket Items
There are a few reasons to buy big-ticket items with a credit card. First is the purchase protection you receive. When you put items on a credit card, you often get protected from theft, damage, or loss of the time for as many as 3-4 months after the purchase.
Of course, you should make sure your credit card offers purchase protection, as not all of them do. Another benefit to putting large purchases on a credit card are the rewards you may get. Whether you have a cash back credit card, one with travel rewards, or some other reward, a large expense will mean significant rewards for you.
Check your credit card terms, though, as some will only provide cash back for purchases up to a certain amount.
Travel reward credit cards offer some of the best rewards out there. If you have a travel card for one airline, for example, you’ll often get double (or even triple!) points or miles: some for the actual purchase of the flight and then some for the actual travel you take.
Many credit cards also provide travel protection, so if you can’t go on the trip for some reason, your bags or lost, or you get stranded, your credit card company can often help.
3. Car Rentals and Hotel Rooms
Not only is it smart to use credit cards for car rentals and hotel rooms, but some companies also require you to do this. Many companies won’t accept debit cards or if they do, they’ll place a large hold on your card until you return the car or check out. This hold is to ensure they’ll get paid for any damages.
Most credit cards come with some level of free insurance for car rentals as well, so you should definitely pay for a car rental with your credit card.
Most rental car companies and hotels place a small hold on your credit card (a few hundred dollars or the cost of the entire stay, for example) that gets released once you return the car in good shape or check out of the hotel, so make sure you have enough available credit for this hold.
4. Online Purchases
It’s obviously impossible to purchase things online with cash or a check, but you should choose a credit card over your debit card. If you make a purchase online and the merchant fails to deliver what you purchased, your credit card company protects you. If your credit card information is part of a data breach, credit card companies will typically credit your account almost immediately if any fraudulent charges are made and you won’t owe a penny.
If you use a debit card, you don’t receive any of these protections, and getting your money back may take longer and be more difficult.
Some credit card companies also offer return protection, which allows you to return items even after the return window for the company that you purchased from may have closed. If you file a claim with your credit card company and return the item to them, you may be able to get a credit for the item even if the merchant won’t take it back.
While on the topic of the internet, you should check out our articles on online loans.
Who really wants to go inside a gas station and pay for gas with cash? Most people pay at the pump using a credit or debit card. A credit card is preferable, as gas stations are one of the places where credit card numbers are most commonly stolen, due to card skimmers placed on the pumps.
While your credit card number could get stolen, there is more fraud protection with a credit card than a debit card. At most, you might be responsible for the first $50 in fraudulent purchases, but no more than that.
Credit cards often offer high rewards for gas purchases as well, so using credit at the pump brings double benefits.
6. Meals Out
If you and your family love to eat out, make sure you’re using your rewards cards. You can get double and triple points at some (or any) restaurants, cash back, or even special promotions at favorite restaurants.
Some credit cards are better than others for rewards on eating out, so be sure to do your research.
7. Purchases Made Over the Phone
Just like buying online, you have to use either a debit or credit card for purchases made over the phone. If you must give out a credit or debit card number over the phone, go with the credit card. As we’ve already covered, credit cards offer much more protection to consumers if there is any fraudulent activity or the credit card numbers get stolen.
Final Thoughts on When to Use Credit Cards
The key to using credit cards is to do your research, see what’s best for you, pay attention to things like annual fees (these may not be worth it if they are high and the rewards are minimal), and make sure you pay them off every month.
If you want information about the best rewards cards out there for travel, eating out, gas, or just general rewards, continue exploring our site. We have resources for everyone, whether you have stellar credit or are working to bring that credit score up.
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