Credit cards are useful tools that allow you to make purchases without carrying a lot of cash. A credit card may allow you to earn cash back, accrue points, and garner discounts. It is critical to pay your credit card bill on time. When you do, you can earn an excellent credit score that comes in handy when applying for a loan. Furthermore, many credit card companies offer an annual summary of your purchases, allowing you to see where you have spent your money. Check out these eight times when using your credit card can be a wise decision.
8. When Purchasing Big-Ticket Items
Your credit card company may offer an extended warranty for big-ticket items you purchase with your credit card. For example, Visa offers an extended warranty that doubles the time period given by the manufacturer’s warranty for certain purchases. Before making a purchase, carefully read over your credit card’s full terms and conditions to determine if your purchase qualifies for a warranty extension. Some credit card companies also offer price protection. Check with your credit card company to see if they will compensate you if the price on an item drops soon after you purchase it.
7. When Paying Monthly Bills
Depending on your credit card company, using your credit card to pay your monthly bills can enable you to earn more points or accrue airline miles faster. You will want to enjoy these benefits without burdening yourself with credit card debt and racking up insurance charges. Therefore, make sure to pay off your credit card balance in full each month. Carrying a balance from one month to the next negates the benefits of using your credit card in this manner. It is wise to avoid making any purchases you are unable to pay off immediately.
6. When Purchasing a Cell Phone
When purchasing a cell phone, check to see if your credit card company offers an extended warranty on this purchase. Some credit card companies offer protection against theft or damage in the first 30 to 90 days after purchase. Other cards, such as the U.S. Bank Visa Platinum Card, offer cell phone protection if you pay your cell phone bill with this credit card each month. U.S. Bank customers who pay their cell phone bill with their credit card are covered for two yearly claims of damage or theft up to $600 each, with a $25 deductible.
5. When Making Home Repairs
You wouldn’t want to put an extensive renovation on your credit card. However, it can be beneficial to use your card to pay for minor repairs or updates. Some stores, such as Lowes or Home Depot, offer credit cards for purchases in their store. The Home Depot Consumer Credit Card allows you to make purchases of $299 or more with no interest paid during the first six months. As long as you pay off the balance within those six months, this equates to an interest-free loan. However, once the initial financing period is up, watch out for high-interest rates.
4. When Making a Refundable Deposit
When you check into a hotel or rent a car, the merchant may charge a refundable deposit or place a hold on your credit card. This deposit is the merchant’s insurance against any damages or extra charges you may incur. Rather than using a debit card, which can tie up your money until the hold is released, use your credit card to make these refundable payments. These holds typically remain on your account for one to five business days after you check out of your hotel or return your rental car.
3. When Shopping Online
Using a credit card when shopping online offers you added protection if your purchases are lost in transit. The Fair Credit Billing Act protects you against unauthorized charges, errors in billing, and charges for goods and services you do not receive. However, avoid shopping online when using public wi-fi networks. The hotspots found in public places may not be secure and may allow hackers to access your private information. The Federal Trade Commission offers tips on protecting your personal information while using public wi-fi. These tips include using fully encrypted sites, using a virtual private network, and installing browser add-ons.
2. When Paying for Travel Expenses
Using a credit card to book your airline tickets, hotels, and car rentals may help you earn rewards. For example, the Discover It Miles Travel Credit Card allows you to earn points toward future travel. At the end of the year, Discover doubles the miles you have earned. Furthermore, using your credit card may offer protection against snafus that arise. Some credit card companies provide additional benefits, such as travel insurance. Chase Sapphire Reserve offers points, travel credit, and trip cancellation/trip interruption insurance. Check with your credit card company to see if travel benefits are available to you.
1. When Separating Business Expenses from Household
Keeping separate credit cards for business expenses and household expenses simplifies your finances when it comes to tax time. Furthermore, maintaining a separate credit card for business expenses can help you earn points or cash back. These benefits may be helpful for your business when purchasing products such as gasoline or office supplies. A business credit card may also provide you with expense tracking summaries. Whether you maintain a store-front business or have a side hustle, applying for a business credit card can help you organize and separate your business and personal finances.