Credit cards can be a blessing or a curse, depending on how you use them. If you’re charging more than you can pay off each month or you’re using your cards to shuffle your debt around, it’s probably time to put them away for good.
On the other hand, there are some benefits to paying with credit if you’re using your cards wisely. Depending on what you’re buying, you may be able to take advantage of special deals or discounts, earn rewards for every dollar you spend or get added protection for your purchases. Here are just a few things that you may be better off buying with plastic.
1. Appliances and Electronics
If you’ve got your eye on a big-screen TV or you want to replace your old appliances with all-new stainless steel versions, paying with a credit card is a smart choice. Many credit card issuers now offer complimentary extended warranty programs for the things you buy with your card. These programs vary in terms of what they cover and how long the warranty lasts, but generally they can be used to repair or replace an item if it’s damaged.
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Some credit card companies also offer purchase protection, which covers loss and theft, and price matching for the things you buy. For example, if you see the washer and dryer you just bought on sale somewhere else, your card issuer will refund the difference to your account. If you’re planning on making a big purchase, using your credit card could actually save you money in the long run.
2. Travel Arrangements
Using a credit card to book a flight, make hotel reservations or reserve a rental car is a no-brainer for several reasons. In terms of peace of mind, credit cards are good for travel because many card issuers offer things like travel insurance, trip cancellation service, emergency services, medical assistance and rental car insurance at no additional charge.
Certain credit cards also let you earn rewards when you use your card to cover travel expenses. Depending on which card you have, you could earn free flights or hotel stays, discounts on car rentals and vacation packages, free upgrades and access to VIP programs or even cash back. Some cards also offer added perks like free concierge service and special access to discounts on entertainment and sporting events. So it pays to shop around for the right card if you’re a frequent traveler.
3. Tax-Deductible Expenses
Claiming certain expenses as a tax deduction is a great way to minimize the amount you owe to Uncle Sam but you have to be able to prove your deductions. Keeping up with your records throughout the year can be a headache, especially if organization isn’t your strong suit. Using a credit card to pay for your deductible expenses is an easy method of record keeping.
Depending on your situation, the kinds of things you’ll want to use your card for may include business expenses, charitable donations, healthcare expenses, childcare expenses and qualified education expenses. Just be sure you hang on to your statements each month so you’ll have the records you need when tax time rolls around.
4. Online Purchases
Shopping online is convenient but it also comes with certain risks as far as who can see your personal information. Whether you’re making a one-time purchase or you do all your shopping online, paying with a credit card is the safest way to go.
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Credit card issuers typically offer some type of fraud or identity theft protection for if your information is stolen. Depending on the card, the coverage may be better than what your bank offers for purchases made with your debit card. You also don’t have to worry about would-be criminals gaining direct access to your bank account when you pay with credit.
5. Recurring Bills
If you’re diligent about paying your credit card off in full each month, then using it to pay all of your recurring bills is a good way to streamline your finances. This way, you’ll know that everything is paid on time and you’ll only have to deal with paying one credit card bill each month. If you’re using a cash back rewards card, you could even earn money back for every dollar you charge to the card.
Credit cards are a financial tool that should always be used responsibly. This means keeping your spending in check, paying off your balance and making smart decisions about the things you buy with credit. Knowing what you should or shouldn’t buy with plastic can help you get the most out of your card in the long run.
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