I write a lot about the dangers of credit cards. I have called them “frenemies” and “necessary evils” in the past. I dislike credit cards because a lot of people can’t handle them. They buy, buy, buy and then don’t pay off their balance at the end of the month.
Credit card companies rightly so collect fees then on the unpaid balance and charge fees for their services. All of which makes it harder and harder for the average consumer to get out from under the debt and get back in the black.
What I have come to realize though is that Easy Street readers are not “average consumers.” You are smart shoppers who want money saving advice that will help them lead fuller lives. You are the consumers that can handle credit cards.
Exercising Your Money Muscle
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Credit cards aren’t all evil. They can be really handy financial tools if given to the right person. As long as you don’t build up debt on them and pay off your balance each month you can benefit from them.
So for those of you that can handle credit cards I thought I should tell you about the perks you can get by using your credit card. If you charge these purchases you can get a range of beneficial services.
Check out my list of the six types of purchases you should ALWAYS charge to your credit card.
1. Big ticket items
Expensive purchases like refrigerators, laptops, outdoor grills, televisions, and furniture should always be bought on credit, providing you can pay off the bill at the end of the month. Why? For starters most credit card companies offer additional warranties over and above the store’s original warranty. And it’s totally free. This saves you from being suckered into buying the store’s extended warranty program which would drive up the purchase price of the item you are buying.
In addition, you should charge major purchases like these because of the price guarantee most credit card companies offer cardholders. Most of the time if you buy a big ticket item credit card companies will refund you the difference if you see it for sale within 60 days of purchase. That price protection comes in real handy when your refrigerator suddenly stops working and you need a new one a.s.a.p. but don’t have time to price compare or wait for a sale.
2. Home maintenance or improvements
A big fear of mine is hiring service providers like landscapers and construction workers to make repairs and improvements to my property. I always worry that no matter how many pictures they show me of their work, or how good a rating they receive on Angie’s List that I will get screwed over in the end. To protect myself I always charge these purchases when I use a new service provider. This way if the bushes the landscaper put in a week ago die or the new flooring the handyman installed starts to buckle a month later I have some way of getting my money back. If I were to pay these types of service providers in cash there would be nothing I could do if something goes wrong with their work down the line. Charging these types of purchases on my credit card gives me a form of protection. If the works is unsatisfactory to me I can call my credit card company and perform a charge back to dispute the purchase. That means I’ll get my money back and the unscrupulous service provider can’t screw me over.
3. Fragile items
Ever buy something and then break it almost as soon as you get it home? Happened to me years ago when I bought a new cell phone. I think it was the Motorola Razor. It was new to the market and I was extremely excited to be able to get one and look like one of the cool kids for not a lot of money. I brought it home from the store and within 24 hours I had dropped it in the toilet. Not my finest moment. Thankfully my credit card company helped me out. I was able to get a new phone, not totally free of charge but for less than what it would have cost me to buy an entirely new one. If you buy something and break it fairly quickly afterwards your credit card company can help you recover some of the purchase price in damages. It may not be ideal, but at least you are able to get some money back.
4. Rental cars
So we’ve all learned by now not to buy the extra rental car insurance companies like Alamo, Hertz, Enterprise and Budget try to push us into when we rent a car. If you pay for the rental with your credit card you should be covered (in most instances). Most major credit cards come with no-cost rental car collision and theft protection. If you have protection and you get into a wreck, your credit card company will theoretically pick up the tab for anything your auto insurance doesn’t cover, like your deductible, and towing charges. If you don’t have personal auto insurance, it may even reimburse you for the entire cost of the damage. All Visa and Diners Club card holders get it automatically, while MasterCard, Discover and American Express offer it only to its elite card holders.
5. Monthly recurring charges
A lot of people have this fear of signing up for a gym membership because they are afraid they’ll never get the company to stop charging their account if they ever want to cancel their membership. Anytime you sign up for a service that needs to charge your account each and every month, you should use your credit card. Doing it this way (as opposed to having them deduct the fees directly from your checking account) offers you protection in case you ever want to cancel the services but the company won’t stop charging you each month. If you keep getting charged but have canceled your membership you can call your credit card company to stop the recurring charges.
6. PayPal purchases
A lot of places now accept PayPal as a form of payment. It makes buying things online easier when online companies can’t accept credit cards. When you sign up for PayPal the company will ask you to link your account to your bank account. That is bad. If you ever need to dispute a charge or are a victim of fraud you’ll have a hard time getting your money back on your own. Instead link your account to a credit card. This way if you need to get your money back all you have to do is call your credit card company instead of waiting around for PayPal or the seller to do anything. You’ll have your money back a lot quicker this way.
See credit cards aren’t all that bad…if you know how to use them properly. They are awesome at providing an extra layer of protection between you and the company you made a purchase.
From travel insurance to fraud protection, these little known services can actually save you money. Who would have ever thought that a credit card company would help you save money!
The IRS Doesn’t Talk About This Often
Information is power and that is exactly why this isn’t talked about much at the IRS.
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Keeping Money in Your Pocket,