Paying cash for day-to-day purchases like your morning coffee or a tank of gas can help you control expenses and avoid overspending. For many of us, spending feels more real when we can actually see the money leaving our hands. Credit cards can make it easy to forget we’re actually spending money when we whip out the plastic.
There are times, however, when it makes sense to use a credit card. One of the best credit card tips we’ve heard is to learn when it’s appropriate to use a credit card to make a purchase.
First, you should know the good reasons to use a credit card. These include:
- Making the cost of a big-ticket necessity more manageable by spreading the expense over a finite term.
- Providing greater protection against fraud or loss of an expensive item due to shipping errors, mishandling or product defect.
- Providing a more secure transaction than dealing with cash.
Poor reasons to use a credit card include:
- You’ve run out of money until the next paycheck and there’s no way you could pay cash for whatever you’re buying.
- You’re buying an item that you wouldn’t be able to afford otherwise, the cost of which exceeds the amount of cash you have in the bank.
When you consider the good reasons to use a credit card, here are the top five purchases you should put on plastic:
1. Big ticket electronics – Financing expensive electronics over a few months makes the payments more manageable. Plus, using a credit card for the purchase affords you that extra layer of consumer protection that you can’t get from cash.
2. Airline tickets – Since 9/11, paying cash for an airline ticket is virtually impossible. You could use a debit card, but debit cards do not offer the same level of purchase protection that credit cards do.
3. Hotels/travel packages – Most travel is now being booked online and credit cards make it easier to reserve hotel rooms or make travel arrangements. Paying with a credit card can help you take advantage of good rates, and also ensure the credit card company is there to help if you encounter some problem with your reservation.
4. Appliances – For the same reasons you use plastic to purchase a laptop, credit cards make sense for buying appliances like a new refrigerator, dishwasher or stove.
5. Jewelry – Expensive jewelry is a significant investment. If you pay in cash and then lose the receipt, you’ll have a difficult time returning an item or asking for a refund if something is not satisfactory. Using a credit card ensures you’ll have a permanent record of the purchase.