Credit cards often get a bad rap. The temptation that comes with the ability to “buy now, pay later” is a major reason many people have financial problems. Unmanageable debt, maxed out cards, and the low credit scores that come as a result of irresponsible credit use can result in major financial (and emotional!) problems.
The truth is, however, that it’s just plain smart to put some things on a credit card rather than pay with cash. Here are five things you should always put on your credit card:
- Electronics and appliances.
Most major credit card companies (including Visa, MasterCard, and American Express) offer extended warranties for items that already have warranties in place, including electronics and homes appliances. These complimentary extended warranties usually double the manufacturers’ warranty, providing added protection on both repairs and replacement costs. It also means you can say “No thanks” during checkout when asked if you want to purchase the extended warranty.
- Purchases while traveling.
While it’s always good to carry a small amount of cash while traveling for gratuity and other minor expenses, as a general rule, it’s much safer to put your travel purchases on a credit card rather than paying with cash or a debit card. This helps protect you in case your wallet or purse are lost or stolen, since you’re not responsible for purchases made with a stolen card. When you lose cash, it’s usually gone forever. It’s also easier to make purchases overseas with a credit card instead of having to exchange money.
- Rental cars.
No rental car company will accept cash, but many will accept debit cards. It’s still a good idea to put your rental cars on a credit card. Most credit cards offer rental car coverage that is just as good as the coverage offered at the check-in counter. Going through your own insurance and your credit card may add a little extra time, but it will still save you about $25 per day.
- Tax-deductible expenses.
If you have a small business or deduct a number of expenses on your taxes, put those expenses on a credit card. It’s much easier to track this way. Since records of your purchases are all kept electronically on your online statements, you don’t have to worry about saving receipts.
- Large purchases.
Nearly all credit cards offer rewards for your credit card purchases. In some cases, these rewards can be significant, including cash back and mileage on air travel. If you’re making a large purchase, put it on your credit card so you can earn the rewards.
Your credit card documentation can provide you with a full list of benefits it offers. While it’s to your advantage to put certain purchases on your credit card, remember you’ll negate these benefits if you don’t pay your card off in full every month to avoid interest charges.
