You’ve probably heard that using credit wisely can help you build credit, earn rewards, and even get better deals. But when it comes to certain purchases, using a credit card can be even more beneficial than paying with cash or other payments.
Here are 11 situations where using a credit card is a smarter move.
1. High-End Electronics
Using a credit card to purchase high-end electronics can be a smart move for a few reasons.
Firstly, many credit cards offer purchase protection, which can safeguard you against damage or theft for a period after purchase.
Secondly, some credit cards offer extended warranties or product protection plans that go beyond the manufacturer’s warranty, offering additional coverage against defects or malfunctions.
This can save you in costs in the long run, especially if you’re buying a high-end item.
Lastly, many credit cards offer reward programs that can provide cash back, points, or miles for your purchases. This means you can potentially earn rewards on your high-end electronics purchase, essentially earning back a portion of the cost.
2. Travel Purchases
A vacation or business trip can be a major expense. Many credit cards offer travel rewards, points, or miles that can help you save on flights, hotels, or other travel-related expenses.
Plus, many credit cards when used for travel can provide added protection and benefits like travel insurance. American Express is well known for providing some of the best travel protection benefits.
Also, most hotels require a credit card for incidentals.
3. Fine Jewelry
When buying fine jewelry, using a credit card gives you an extra layer of protection. If you have issues with the authenticity or the condition of the jewelry after purchase, your credit card company’s dispute resolution comes into play.
This means you can file a dispute with your credit card company and they will investigate the issue. This extra protection can be valuable especially if you’re purchasing from a less reputable vendor or online marketplace.
4. Big-Ticket Items
Thinking about buying a new car or a major appliance? These items often come with financing options that can save you money in the long run.
With a credit card, you can take advantage of interest-free periods, discounts for using store credit cards, or special financing offers that can help you manage the cost.
5. Car Rentals
Most car rental agencies require a credit card for the security deposit, which is held as collateral in case of damage or accidents. But using a credit card can offer more than just acting as a deposit.
Many credit cards provide additional insurance coverage for your rental car, which can exceed the basic coverage. This can protect you from financial liability in case of accidents, theft, or damage to the rental car.
6. Security Deposits
When renting a home or apartment, you’ll be required to provide a security deposit, which is usually returned to you when you move out, minus deductions for any damages.
Paying the security deposit with a credit card creates a clear paper trail for easier refund disputes.
7. Medical and Emergency Expenses
Life throws unexpected curveballs at us. When you’re faced with a medical emergency, a sudden home repair, or another unexpected expense, credit can be a lifesaver.
Credit cards let you to cover these costs immediately and gives you some time to figure out your finances without adding extra stress, especially when you don’t have enough money in your bank account to pay.
8. Business Expenses
For entrepreneurs and business owners, credit cards can be an invaluable tool for managing cash flow.
Credit cards offer flexibility in managing expenses, especially when dealing with fluctuating income and unpredictable business cycles. Using a business credit card allows you to make purchases even when your cash flow is tight, paying off the balance later when your income picks up.
Also, using a credit card specifically designed for business use helps establish a credit history for your company.
Making payments on time and keeping your credit utilization low builds a positive credit score, which benefits your business in the long run.
Many credit cards offer valuable rewards programs that can save you money on business expenses. Credit cards also provide a detailed record of your business expenses, making it easier to track your spending and identify potential areas for savings. This information is helpful for budgeting and tax preparation
Some business credit cards even offer purchase protection, which safeguards you from fraudulent purchases or damage to business assets. This can be a safety net for expensive equipment or supplies.
9. Tax Payments
Paying your taxes through a check or electronic funds transfer is generally the safest approach.
This creates a clear and verifiable record of your payments, which can help prevent disputes or complications with your tax authority.
10. Home Improvements
Renovating or upgrading your home can significantly boost its value, but the costs can be substantial. Using a credit card for home improvements can sometimes unlock special financing offers or discounts, making these projects more manageable.
And for major home improvement projects, credit card payments gives you another layer of protection. If a contractor fails to deliver as promised, you can leverage the dispute resolution from your credit card company.
This means you have recourse if the work is incomplete or if the contractor simply doesn’t meet their obligations.
11. Online Purchases
Using credit cards for online purchases provides extra protection against fraud and unauthorized charges. Many credit cards offer purchase protection and fraud prevention services.
When shopping online, credit cards offer better fraud protection than cash or debit cards. If your card information is compromised, you’re typically not liable for unauthorized charges. Many credit cards also provide features like virtual card numbers for added security.
