You can finally buy anything you want! That new leather couch or maybe those fancy shoes you saw on sale last week.
There's a catch, though.
Credit cards are a convenient form of payment but come with responsibility. It's easy to get caught up in the excitement of simply swiping away for desired items.
After all, what's the harm since you'll pay it back later?
While this is true, it doesn't mean you should charge every single thing in sight. It's important to know the right situations to use your card as opposed to sporadically whipping it out each new place you go.
Here are ten types of purchases that are best to charge on credit card.
Submitting personal payment information over the Internet at one time seemed risky. Most people don't think twice anymore due to online shopping's convenience. Over one-fourth of the world's population are anticipated to be digital buyers by 2021.
As the Internet's advanced, however, the risks of purchasing from it have remained the same.
Using a credit card instead of debit for online purchases will save a lot of time and headaches in the unlikely event your card number's stolen. Banks can quickly remove credited purchases, while reimbursing your checking account could take much longer. Hackers don't receive access to actual money just because they have your credit card information.
Many credit cards also offer reward programs specifically for online purchases including cash back and reduced interest rates.
Over the Phone
It's 3:00 a.m. and the offer of a lifetime comes across your television screen. Better yet, if you call within the next ten minutes shipping's free!
Similar to the Internet, credit cards are best used for transactions over the telephone.
It's just as easy to be fooled by a convincing voice on the other end of the line as a phony website. You generally don't know who's taking down your payment information or where it's being recorded after you hang up.
Unlike the digital world, transactions over the phone are all verbal and provide no electronic trail. This is more crucial if you end up receiving the wrong ordered item or are never sent it at all.
The bank isn't the only place for credit cards. Many airlines offer their own and are perfect for those constantly on the go. Reward benefits can earn you cash back and reduced travel expenses if you rack up enough miles in the sky.
Paying for airfare with credit could also save you money in the long run.
Those airline tickets you purchased last month may now be offered at a lower price. If you forked over the money up front you could be out of luck, but many credit card companies will work with the airlines to help get you that new reduced fare.
Some credit cards even offer travel insurance, separate from the airlines, that can be used if you need to cancel your trip or your luggage is lost.
Most hotels expect you to pay with a credit card. When you book a reservation the actual payment usually isn't required until you arrive to check in at the earliest.
Hotels take your credit card information up front to hold the reservation, but typically don't apply any charges until you check out. With a debit card, however, hotels usually withdraw money from your checking account up front which could cause complications in the event of rate changes or cancelling a reservation.
Many hotel chains also have their own credit cards that can earn you free night stays or room upgrades. If you use your card in a place foreign to your home address, let your bank know ahead of time to avoid your card being cancelled due to suspected fraudulent activity.
Similar to booking a hotel room, rental car agencies anticipate reservations to be made with a credit card. In fact, using an alternate form of payment can be a hassle.
Because a car possess a greater liability risk for accidents, damage or theft, rental agencies prefer the protection of being able to charge a credit card for unforeseen costs as opposed to hitting a dead end with your checking account. Using a debit card or another form of payment usually requires showing proof of travel itinerary or auto insurance.
In some cases, credit card companies offer auto insurance protection in lieu of the rental car agency's depending on your credit and driving history.
Appliances and Electronics
You finally saved up for those granite countertops or carved out a place on the wall for that brand new flat screen. Even still, pay with a credit card if you're able to.
Most retailers offer extended warranties for large purchased items, but your credit card company likely offers a comparable one at a better value. To qualify you'll usually need proof or purchase and a copy of the manufacturer's warranty.
It's also important to be mindful of data breaches. Unfortunately, it's out of our control, but it's much easier cancelling a credit card than recovering funds from a checking or debit account. Something to keep in mind next time you go on a shopping spree.
The goal of a credit card is to establish and build credit. While you can purchase just about anything with that piece of plastic, it's wise to base it around expenses you anticipate every month.
Using a credit card is ideal for utility bills (electricity, water, etc.), rent payments or any other fixed costs that are factored into your budget. Many companies offer an autopay system that will automatically charge your card without you having to manually enter it each time.
You could also use this method for costs like planned grocery store visits, cell phone bills or a gym membership. Some people even use separate credit cards for bills or designated expenses to keep finances better organized.
The costs for fueling our car each month is similar to budgeting utility bills. Swiping your card at the pump, though, is one of the more riskier places for your payment information to be stolen.
Skimmers are discreet devices attached to a gas pump's card reader that let criminals steal card numbers. Usually you won't realize your card's been stolen until purchases are made, all the more better to have your credit card information compromised instead of your debit card.
You can avoid this hassle by keeping an eye out for card readers that look tampered compared to other pumps. These devices can also be found at places like ATMs.
Many service providers and small businesses have shifted away from only accepting cash payments by now taking credit cards, and you should take advantage.
Paying with a credit card provides you more protection if you're unsatisfied with the service you initially agreed upon or have a dispute with the contractor. Maybe your kitchen cabinets are left in shambles or only half of your lawn is landscaped.
This is also helpful because service providers that take credit cards mean they also accept the legal terms set forth by the card companies. This benefits you if the charge needs protesting, while demanding your cash back could leave you out of luck.
Tax-Deductible Items and Business Expenses
If you're a business owner or self-employed you know the importance of holding onto receipts. Using a credit card is another helpful method for tracking purchases you can later deduct during tax season. Credit card fees accumulated through interest rates from business expenses can also be deducted unlike personal purchases.
Many of the items mentioned so far, especially travel expenses, can qualify for tax deductions if they're related to your livelihood. Personal items purchased specifically for charitable donations can also be deducted.
Small companies may be able to take advantage of business credit cards. These have many advantages over personal cards including higher credit lines and the ability to monitor employee spending.
When to Charge on Credit Card
It may seem like there are benefits to pay for everything with a credit card, but don't swap all your cash for plastic just yet.
While these items are ideal for credit card purchases, you shouldn't go out of your way to credit everything if you can't pay it back within reasonable time. Those with disposable income may be able to run a higher credit line compared to those on a fixed income budgeting bills.
There are many benefits to charge on credit card, but they're not all worth it in the long run if it compromises your credit score. This could come back to haunt you when applying for a mortgage or auto loan.
Credit card debt is a serious issue impacting more people each year. Your wallet is like a holster for your credit card, use it wisely and appropriately.
Need help understanding more about credit cards or which purchases to make with them? Find the best credit card for you or contact us to learn more about how we can help.