Credit cards can be a great way to pay for many goods and services, as long as you're using them responsibly and spending within your means. Credit cards are especially ideal for some types of purchases – here’s why.
1. Appliances
If your refrigerator stops working and you need a new one right away, you may not have the cash to spare upfront. Expensive appliances, such as refrigerators, washers, dryers, and ovens, are ideal purchases for credit cards simply because it's not always feasible to spend that much cash at one time. Using a credit card will allow you to pay as you can over time, while having immediate access to the appliance you need.
2. Home Repairs
The same goes for some home repairs. Minor fixes can wait, but others require more immediate attention. Putting the expenses on a card will allow you to pay for the services or items you need right away, like air conditioning repair or a plumbing issue. For those home repairs that require more money than you're able to put on a card, consider looking into a home equity line of credit. (1)
3. Online Purchases
Using a credit card for an online purchase is ideal because of the extra protection it provides. This is especially true for sellers you aren't familiar with. In case of a dispute (the item never arrives or isn't the quality it should be), if you can't get satisfaction from the seller, you can ask the credit card company to cancel payment. This option isn't available if you pay with a debit card.
Using a credit card may also help if you need to return an item. "Many credit cards offer 'return protection,' a benefit that allows you to make a claim if a merchant won't allow you to return your purchase for a refund of the purchase price," says The Ascent at Fool.com. (2) "Return protection effectively extends the amount of time you have to return an item you purchase."
4. Gasoline
Cards offer great convenience compared to cash when it comes to paying for gas. Paying with a card at the pump keeps you from having to go inside for the transaction, which can be convenient if the weather is bad. When it comes to debit cards versus credit cards, paying with credit gives you the opportunity to build up cash back or rewards by paying for something you're already buying on a regular basis. Gas pumps are also often the target of identity thieves who steal account information by using counterfeit card readers. Credit cards generally offer better protection against identity theft if it does occur.
5. Restaurant Meals
Like gas pumps, restaurants are places where the possibility of fraud exists. You never know what can happen between the time your card is taken from your table and the time it is brought back. Once again, the extra protection of using credit can help if a problem should arise. Additionally, restaurants can be great for earning cash back bonuses and rewards. You may even be able to redeem rewards at the restaurant.
6. Travel Expenses
Using a credit card for travel expenses has several advantages, especially when it comes to booking.
As Janet Fowler at Investopedia explains, "Many credit card issuers will offer their customers assistance with travel. This often comes in the form of cancellation or trip interruption coverage—which many people end up booking separately through an insurance company because they don't even know they have coverage through their credit card if a booking is made with that card. Some cards may even offer coverage for lost luggage or even some emergency medical coverage to their clients. Booking with a travel-themed credit card allows cardholders to double up on the benefits as these cards tend to offer an even higher rate of points awarded on travel-related purchases." (3)
The key with any of these purchases is to buy only what you can actually afford, then be sure to make your payments on time. Used responsibly, credit cards offer many benefits, including convenience, fraud prevention, and rewards in cash or points.
1. Subject to credit approval, terms and conditions apply. See banker for details.
2. https://www.fool.com/the-ascent/credit-cards/articles/5-of-the-best-things-to-buy-with-a-credit-card/
3. https://www.investopedia.com/financial-edge/0512/purchases-you-should-always-make-with-a-credit-card.aspx