Credit cards often get a bad rap.
“There is no positive side to credit card use,” personal finance guru Dave Ramsey wrote on his website. He has a good point, as our consumer-driven society makes it incredibly easy to spiral into credit card debt.
However, advantages to credit cards include the purchase and fraud protection they offer, and the fact that using them allows you to build the credit required for major purchases in the future, like a home or car. There are some situations when it’s smarter to choose credit over debit — as long as you pay your bills on time, that is.
Now that that’s out of the way, use your credit card responsibly for these eight types of purchases:
Kathleen Elkins contributed to an earlier version of this article.
1. Online purchases
It’s better to be overly cautious and use credit over debit — particularly if you’re buying from a smaller and less established company.
It’s smart to use a credit card with built-in travel protection when buying flights, as you never know when something might come up.
3. Items from small vendors
If you’re at a flea market, food festival, or buying from a vendor on the street who accepts cards, err on the side of caution and use credit.
4. Car rentals
Many credit cards offer rental-car insurance, which will cover you in most situations. Also, if you use a debit card, you may have to put down a large deposit.
5. Hotel rooms
As with renting a car, if you use a debit card to book a room, you may have to submit a large deposit to cover things such as damage to the room, room service, or other incidental purchases.
6. Purchases made over the phone
Any purchase that is expected to arrive in the future should be made with a credit card, in case the item never makes it to your doorstep.
7. Products offering warranties
Many credit cards offer extended-warranty policies that will cover your electronics or other goods beyond the manufacturer’s warranty.
8. Big-ticket items
If you’re in the market for a new washing machine or laptop, go with credit. The purchase protection will come in handy if something ever goes wrong with the item.
Author: By Mike Nudelman