Some financial advisors suggest that consumers should never buy anything with a credit card and should only use cash for purchases. The philosophy behind this advice does have some merit; after all, credit cards are notorious for charging double-digit interest rates, and this can put irresponsible borrowers in a deep financial hole.
However, for those that pay off their balances in full every month and can use credit responsibly, there’s a whole host of benefits that can come from the appropriate use of a credit card. In fact, for some types of purchases, failure to use a credit card can actually be a mistake, as you’d be forsaking various forms of protection and benefits. Although the caveat is always there that you must use your credit responsibly, here’s a list of purchases that you should always consider making with a credit card.
Electronics and Appliances
Depending on the type of card you have, you should always buy appliances and electronics on credit. Beyond any points that you might earn, many credit cards offer extended warranties on purchases of electronics and appliances. For example, if you buy a dishwasher with a one-year manufacturer’s warranty, your credit card company may double that warranty period to two years. Some credit cards also offer damage and theft purchase protection. If your purchase is damaged or stolen within a certain time period, usually 90 to 120 days, your card company will repair it or reimburse you for the purchase, up to certain limits.
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Flights are among the most obvious purchases to make with credit cards. For starters, many rewards credit cards offer additional bonus points for the purchase of flights. However, most travel-oriented credit cards offer many additional perks for flight purchases. Some cards offer free trip delay or cancellation insurance, while branded cards often grant free baggage privileges for flights purchased using the card. Many travel cards also offer lost luggage insurance, reimbursing you for your bags and their contents if they don’t turn up. Once you begin your trip, some cards offer free access to airport lounges as well.
Some travel-oriented credit cards offer car rental insurance, allowing you to decline the expensive coverage that car rental companies typically charge. In some cases, this insurance is primary insurance, meaning you won’t have to involve your own car insurance company at all. Some cards also offer free enrollment and premium status in various car rental rewards programs, which can provide access to car rental discounts, free upgrades and other perks. Using a credit card for a car rental can also make it easy to check out when you return your car, as you can often simply leave the car, walk away and receive a receipt in your email.
Purchases You Might Return
No one can predict with certainty if they’re going to return something after they purchase it. However, if you feel like there’s any chance that you might want to make a return at some point, buying that item with a credit card is a good move. The primary reason for this is that sometimes merchants are reluctant to live up to their return policies. If you’re trying to return something and the merchant won’t take it back, you can usually file a complaint with your credit card company. In most cases, the credit card company will conduct an investigation and refund your purchase price if they can’t get the merchant to capitulate. Obviously, this doesn’t apply to cases of fraud or abuse, but for most legitimate transactions, you’ll have the backing of your credit card company.
Vendors You Don’t Trust
Sometimes, you want to buy a product but you may have questions about the vendor. Usually, this happens with an online storefront, but it could also come in the form of a street vendor that uses a portable credit card machine. In any event, it’s imperative that for a transaction like this you use a credit card rather than cash or other payment options. If the merchant delivers a shoddy product or vanishes off the face of the Earth after your purchase, you can file a complaint with your credit card company to investigate and get you a refund. If you pay with cash instead, you’ll never see that money again. A credit card can also protect you from any fraudulent transactions that an unscrupulous vendor may make using your card.
Mobile Phone Bills
If you pay your cellphone bill with certain credit cards, you’ll receive cellphone protection for damage or theft. If your phone is damaged or stolen, you can file a claim with your credit card company and get reimbursed for the loss, typically up to $600. Usually, this coverage only lasts while you continue to pay your monthly bill with your credit card. This benefit can be an actual money saver even if you never file a claim, because phone carriers may charge as much as $15 per month for the same type of coverage, Some may even have a deductible or service charge on top of the monthly insurance cost.
Concert or Event Tickets
When buying concert or event tickets, it makes sense to use a credit card simply for the dispute resolution services provided by credit card companies. Plus, using the right credit card can also get you additional ticket benefits. Some credit cards offer priority access to event tickets, meaning you’ll get access to buy seats before the general public. If you’re looking for the best seats for a hot show, this can be an invaluable benefit. Sometimes, card companies also offer additional enhanced event experiences, such as VIP parking or seating and access to meet-and-greets or pre-/post-event parties.
Credit card issuers operate in a competitive field, and that has benefitted credit card customers immensely. Most rewards cards now offer bonus multipliers in various categories, such as three times points on travel and dining or two times points on groceries. The key to maximizing these bonus points is to pick a card that provides enhancements for things that you normally spend your money on. For example, if you spend a lot of money on groceries and gas, you’ll want to direct that spend toward a card that provides bonus points in those categories. The caveat here, of course, is that you’ll have to avoid the temptation to overspend in categories you might not normally spend money on, such as travel, dining, home improvement or other common bonus categories.
Using a credit card for your online purchases can not only help protect you from fraud but also provide you with additional perks. Many credit card companies now offer you everything from discounts to cash back if you buy through their shopping portals. For example, you might be able to earn 4% cash back if you buy a Samsung product through a shopping portal or 2% back at Macy’s. Most shopping portals offer access to hundreds if not thousands of stores. There’s no additional cost to consumers for using these shopping portals, so if you’re going to make a purchase anyway, you might as well get cash back for doing it.
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If you’re going on an international trip, be sure to pack your credit card with you. Credit cards generally offer better exchange rates than foreign vendors or money changers, getting you more value for your money. Some overseas merchants may not even accept U.S. debit cards or American money, so using a credit card can be much more convenient. Although some credit cards charge international transaction fees of 3% or more, there are plenty of cards that have no foreign transaction fees at all. Before you travel, be sure to verify that your card falls into the latter camp.
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