Credit cards can help or hurt you financially depending on how you swipe and pay them off each month. In general, it’s never a good idea to pay with plastic and charge something you’re unable to pay off in full because you’ll have to pay interest on the purchase.
However, there can be major perks to using a credit card correctly– like earning travel rewards, cash back and other rewards for every dollar spent.
Here are five smart purchases you should put on a credit card.
1. Electronics and appliances
Many credit cards offer extended warranties and price protection on items like electronics or appliances that carry a warranty already. Terms vary according to how long the warranty lasts, but usually you will have extra coverage to repair or replace an item if it’s damaged. Many card companies also offer purchase protection and will even price match, so if you see the item on sale somewhere else they will refund the difference to your account.
2. Online and overseas purchases
Paying with a credit card is one of the safest ways to shop online. For one, you don’t have to worry about criminals getting access to your direct bank account. Your credit card also probably offers some type of fraud or identity theft protection if the information is stolen. This is especially helpful in overseas purchases. Many credit cards won’t charge foreign transaction fees on overseas purchases either, saving you up to 3% or even more on foreign transactions.
Booking travel expenses with a credit card is a no brainer. You earn easy rewards such as free flights or hotel stays, free package upgrades, discounts on car rentals, discounted vacation packages and even cash back. Some cards even offer trip insurance, emergency services, rental car insurance and more at no additional cost.
4. Tax-deductible expenses
Keeping up with your running list of deductible expenses all year can be a headache. Using a credit card for these can make it easier to track and keep a record of the charges when tax season rolls around.
5. Service providers
You can set up your monthly service providers (like internet, cable, water, gas, etc.) on your credit card to make the bill pay seamless and on-time each month. But it’s also a good idea to pay other service providers like home contractors or landscaping companies with a credit card. This way, you’ll have extra protection and the option to stop payment, withhold payment or dispute a payment if you’re unhappy with their work.
The bottom line is to use your credit card responsibly. Pay off your balances and be smart about what you pay for with plastic. But don’t be afraid to take advantages of the rewards and the extra protection your card offers!
Feature Illustration: Laura Caseley