4 Purchases You Should Always Make with a Credit Card
|July 1, 2013|
Financial experts often hone in on an area that’s a trouble spot for many consumers — credit card spending. While there’s no doubt that eliminating discretionary spending on plastic is a way to lower expenses and begin paying down debt, there are advantages to purchasing certain products and services with a credit card that are just too valuable to ignore.
Assuming you can afford to pay off the balance immediately, you should always consider charging these four purchases:
1. Products with warranties: Gone are the days when most big-ticket items were protected by the integrity of the manufacturer. Instead, you’ll often find yourself pushed by a salesperson to purchase an extended warranty. An easier way to protect yourself is to make large purchases with a credit card; certain cards include free purchase protections, including extended warranties.
Extended warranties provided by credit card companies typically double the manufacturer’s warranty for up to a year of additional coverage. In other words, if you spend $1,000 on new refrigerator with a two-year manufacturer’s warranty, buying it with a card that offers extended warranty protection will prolong that protection to three years.
If putting a big purchase on credit makes you uncomfortable, just make sure you have enough in your bank account to pay off the balance in full before the due date. That way, in addition to protecting your purchase, you’ll be lifting your credit score and avoiding interest charges.
2. Travel arrangements and hotel reservations: According to the U.S Department of Transportation’s quarterly Domestic Airline Consumer Airfare Report, the average domestic airfare for the fourth quarter of 2012 was $374. By using the right credit card, you can squeeze some extra benefits out of that big expense. Premium travel rewards cards often have a wide range of travel insurance protections and benefits, including:
- Trip cancellation or delay reimbursement
- Auto rental collision waiver
- Lost or destroyed baggage reimbursement
- Accidental death
- Hotel/motel burglary insurance
- Emergency service
- Roadside assistance
- Travel assistance and concierge services
If you’re a loyal customer to one particular hotel or airline, you can make your travel purchases work for you even more. In addition to the above mentioned protections, you may be privy to special vacation packages, free checked bags and other amenities provided only for cardholders — not to mention the points you’ll be earning toward future travel.
3. Online purchases: With so many devices (cellphones, iPads, readers and notebook computers) being used to pay for products and services online, the need to be protected is more important than ever before. So use a credit card instead of a debit card when making purchases electronically.
If hackers get hold of your debit card information, they can drain your bank account. Even if your bank refunds you quickly, it’s still a huge inconvenience, especially if you have urgent bills to pay. Credit cards aren’t tied to the money you need for daily life (or at least they shouldn’t be), so you have a bit more time for the bank to credit you back for fraudulent charges.
In addition, some cards offer an additional perk for online bargain-hunters: price protection. Take Citi’s Price Rewind program, for example. If an item you bought drops in price within a certain amount of time after you bought it, you’ll be refunded the difference.
4. Contractors’ services: Protect yourself from the horror stories about contractors who renege on an agreement, leaving you stuck with the bill. By using a credit card, you can set up a schedule of automatic payments, withhold or stop payment for unsatisfactory work and keep a paper trail of payments made. If goods and services you paid for aren’t delivered as promised, paying with credit qualifies you for protection under the Fair Credit Billing Act (FCBA), which allows you to pursue a refund from your credit issuer (instead of the crooked contractor) and limits your liability to $50.
It’s important to know exactly what your credit card company offers, as far as protections and perks go, as each one is different. Before charging and assuming you can fall back on your credit card if things go wrong, read up on your card’s terms and conditions, monitor your online statements and, in general, be your own consumer advocate.