Good Times to Use Your Credit Card
Credit, when used correctly, can play a significant role in your finances. Maintaining a good credit rating doesn’t only help you build wealth; it also shows creditors that you are trustworthy. That way when it comes to big ticket items – like a mortgage – lenders may offer you lower interest rates.
At the other end of the spectrum, credit may create huge financial problems if mismanaged. Most people already know that using credit for impulse shopping sprees or basic living expenses like groceries can be risky, as it increases your debts, but what a lot of people don’t know is that there are some cases where it may benefit you to use your credit card.
Below you will find a list of instances when you might decide it’s worth using your credit card. It’s often a good idea to ensure that you have some or all of the necessary funds in your current account when you make your purchase, even if you intend to put it on credit and pay later. That way, you know you’re less likely to struggle with the credit card bill when it arrives.
Big-Ticket Purchases
Buying a high value item such as a large household appliance on credit –and then paying it off quickly– shows lenders that you can pay off something large without needing to struggle. Your credit card may also provide an extended warranty or other types of consumer protection that you would not receive if you paid by cheque, cash or direct debit.
Driving Expenses
As a general guideline, basic amenities like petrol should not be put on credit too often as the costs may add up to quite an increase in your debt. However, since you might buy petrol regularly from many different locations, it may be a good idea to use a credit card. This will help you keep track of your fuel expenditure, and may be more secure than some other payment methods too.
You may also choose to pay larger car-related expenses such as your car insurance premium or major repairs and services via credit card, especially if your credit card currently offers 0% interest on purchases.
Tickets and Hotels
Travel tickets and hotel stays are two things that it may be advantageous to put on credit. The reasoning behind this is that airlines and hotels typically take your credit card details and confirm your credit at the time of purchase, but don’t take the money from your credit account until the start of your trip – meaning the charge may not show up on your account until later.
Putting tickets and hotel stays on credit cards may therefore give you a longer period of opportunity to cancel a trip, or make a complaint, before your account is charged. This can be much less complicated than having to make a claim on your travel insurance later on.
Bonus fact: If you have reward credit cards, there are often reward points available for travel and accommodation!
Landscaping and House Repairs
Imagine contracting a landscape company, only to find that the new grass they put in begins to wilt after a few days. Or, imagine hiring a repair man who ends up breaking something in the process of fixing your toilet. If you put these expenses on credit, the credit company may help you to reclaim the cost if they do a bad job. If you pay in cash or with a check there’s no way to absolutely guarantee getting that money back.
Automated Payments
Automatically-paid regular expenses such as gym memberships and cell phone contracts can be worth putting on a credit card, too. Again,the main reason for this is that the credit company may help to uphold your consumer rights and help you obtain a refund in the case of any complaints that are not resolved by the original service provider.
Credit – when used correctly – can get you out a financial bind and increase your wealth, as well as offering added consumer protection on some purchases. Using your credit in situations like those mentioned here may help to give you peace of mind about large purchases or regular smaller expenses.
Image by MyTudut
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