One of the great conveniences of modern-day finances is that credit cards are now more accessible than they have ever been — this can be great, provided that you are using your cards in a sensible and responsible manner.
Many people opt to use a credit card for their day-to-day purchases so that they do not need to worry about carrying cash with them. Additionally, since credit cards generally come with very strong fraud protections, they are considered more secure than debit cards for use online or in physical stores. Finally, many consumers use cards instead of cash in order to take advantage of the various types of credit card rewards available.
Of course, there are times when using a credit card may not be a good idea. Read on to learn about some the purchases you should never make with a credit card and a few of the ones you should.
Best Things to Buy With a Credit Card
In general, there are several instances where purchasing with a credit card is recommended. Learn about a few of these below.
Electronic Items
One of the best ways to use your credit card is for electrical items. That’s because you can earn rewards, get extended warranties and have easy access to chargebacks if your item ends up being defective.
If you do it right, it can literally pay to take advantage of rewards in some of the best credit cards for large purchases. Since many electronics are quite pricey, it is often better to put them on a card even if you have the cash for them. That way, you can earn cashback, travel points and other perks.
The Chase Freedom Unlimited card is an excellent option when it comes to credit card rewards, since it has a generous low-interest period and purchases over $500 will see you getting a handsome amount of cashback. However, the Discover It Miles is also one of the best credit cards for big purchases owing to the very lucrative rewards program.
But the main benefit of using your credit card to buy electronic items is thanks to the extended warranty that many credit card companies offer on this type of purchase.
Online Purchasing
If you spend a lot of your hard-earned money online, it’s likely that you will require a decent amount of protection, and using your credit card can give you just that.
One of the best credit cards for online purchases is the US Bank Cash + Signature Visa card, which offers 5% cashback on two categories of your choosing. If you tend to buy a lot of clothing items online, for example, this could work out quite well.
However, some people prefer to use a prepaid Visa for online purchases, and there are some excellent ones out there, including the NetSpend Visa Prepaid card. This card has many features that complement the online usage, such as a simple to use app and mobile alerts.
Gas
Buying gas with your credit card is a great idea, as many companies love to hand out additional rewards for this type of purchase. Plus, with gas stations being one of the worst-hit places for card details being stolen, using a credit card over a debit card will also ensure that any scammers never gain access to your bank account.
While credit card fraud is damaging, it is much easier to fix than it is to get your money back after it has been stolen from a bank account.
The best credit card for gas purchases is by far the Citi Premier card, which gives you additional points on gas purchases. However, this card has an annual fee of $95. If you’d prefer a credit card without an annual charge, the Wells Fargo Propel AMEX card is a great alternative, since you still get the extra points on gas purchases and pay nothing for the privilege.
Worst Things To Buy With A Credit Card
Even though credit cards are a great option for many purchases, there are some items that you should avoid putting on your card.
Student Loan
Many people make the mistake of using a credit card to pay off their student loans, but this is not always a good idea. Since credit cards tend to have a much higher rate of interest, a long term pay-off like a student loan can mean that you are really stung by the charges.
Even if you look at one of the 12 months no-interest credit cards like the Citi DoubleCash card, you’ll find that once this period is over, the interest rate will sky-rocket. Therefore, you should avoid putting anything on your credit card that you cannot pay within a few payment periods.
Taxes
When you make a tax payment to the IRS using a credit card, you are charged an additional fee for processing — yet many people are blissfully unaware of this fact.
Since the fee is charged by neither the credit card company nor the IRS, but a third party, it can be quite steep (in some cases up to 2.35%). In order to avoid such a charge, you should never charge your taxes to a credit card.
Spontaneous Purchases
It’s easy to get drawn into making a purchase in the spur of the moment because you simply must have it. However, spending on a credit card, no matter the price, puts you in a position where you are committed to paying off the debt.
If the purchase is a want rather than a need, it is worth giving yourself some time to cool off from the initial excitement and coming back to the purchase with a more level head. This will allow you to only make purchases that you are committed to and can afford to repay.
In general, you should not buy any non-essential with a credit card that you would not be able to pay for immediately with cash.
Conclusion
Credit cards are a great way to pay for purchases and repay the amount over time. Even buying a prepaid Visa card can have its advantages, such as rewards schemes and cashback on certain purchases.
It is, however, vital that before you commit to a purchase, you are sure that it is wise, financially speaking. There are some things that should never be brought using your credit card and others that make real financial sense. Additionally, there are some credit cards that are better suited to different types of purchases so always do your research to ensure you are getting the best value for your money.
By Admin –
