7 Things you should always pay for with your credit card

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By Zina Kumok, personal finance writer

When you go to buy something, whether it’s online or in person, what do you reach for? Do you grab your debit card, a wad of cash or go-to credit card?

The average American has 2.6 credit cards, including travel, cash-back, rewards and store cards. While some may say credit cards are instruments of debt that incite people to spend more than they actually need, there are benefits to credit cards that everyone can take advantage of, making them a vital and necessary part of every person’s wallet. Learn how to activate credit card bonus categories for cash back.

Here are the top reasons to use a credit card and the purchases you should always make with your choice of plastic:

Electronics

Some of the best purchases to make with your credit card are electronics or household items. Blogger Eric Rosenberg of Personal Profitability also recommends buying electronics with a credit card because they protect you in case anything goes wrong. Check the fine print on your credit cards, as many protect you with an extended warranty on these items.

“If anything goes wrong with your item and you can't return it, your credit card company may credit your account for the full value of the item,” said Rosenberg.

That also means you can usually decline the store’s extended warranty coverage if your card has its own. Make sure to save the original receipt and warranty so you have documentation if you need to file a claim.

The extended warranty usually won’t apply if your purchase didn’t come with an original warranty.

Rental Car

Almost every credit card comes with collision damage waiver for rental cars. This allows you to skip additional coverage for your rental car and protects you in case the car gets damaged during the rental period.

The average rental car company charges about $20 a day for the collision damage waiver. Even if you have a credit card that charges an annual fee, it could be worth it if you save money by avoiding the waiver from the rental company.

Travel Abroad

Most debit cards charge a foreign transaction fee between 1-3% of the total purchase. That sounds minimal, but those costs add up quickly when you’re traveling. You’ll pay between $20 and $60 in fees if you use a debit card when abroad.

Many credit cards waive foreign transaction fees, so it shouldn’t be hard finding one without any.

Some credit card servicers also provide travel insurance and trip cancellation coverage if you book the entire trip using the card. Otherwise, you’d have to buy that coverage separately from an insurance provider. Many credit cards will reimburse you if you have to cut the trip short due to illness, if the trip is canceled beyond your control, or if weather delays affect the trip.

Some also offer medical and damage protection if your items get mishandled by airport security or if you fall ill to exotic food.

Many credit cards also offer extra rewards if you buy plane tickets or other travel-related items. Some give you free hotel lounge rewards, extra checked bags or other complimentary services. If you travel regularly, a credit card is a necessity, especially if you don’t want to be on the hook for any suspicious transactions made with your card.

Home Repairs

Many contractors want to be paid with cash or check, but sometimes it’s better to use a credit card. A credit card advocates for its users and provides protection for the user in case they hire someone to do home repairs who doesn’t fulfill the contract.

Some people charge an extra credit card processing fee, but it might be worth it if saves you paying a few thousand dollars for a plumber who ruined your pipes.

Online Shopping

Shopping online comes with more dangers than buying in-store. You never know if those Ray Ban’s you’re buying are genuine or counterfeit. If you use your card, you can file a dispute if you end up getting a Coach purse that’s made in China instead of Italy.

Stores that sell fake merchandise might refuse to refund you if you complain about a purchase. You can dispute that item if you bought it using a credit card. Most cards will immediately credit you the amount while they attempt to reach the manufacturer.

Business Expenses

Tracking business expenses is important if you’re deducting them on your taxes. One of the easiest ways to keep track is by using a business credit card. A business credit card can also help you build business credit, which could aid you in getting a business loan later on.

Many business cards also provide cash-back rewards for special categories like office supplies and travel. Having a business card can also simplify your business deductions during tax time, if you keep all your expenses on one card.

Everything

You can also use your credit card for all your purchases, instead of picking and choosing. Having all your expenses on one card simplifies your finances and makes it easier to return items, file disputes or claim a warranty.

Financial planner Katie Gampietro Burke of Wealth by Empowerment said she recommends using a card for every purchase you make.

“I recommended people use your credit card whenever possible,” she said. “Something that is put on the credit card can be disputed but once money has left your account, if you use the debit card, you can dispute it but the money is usually gone until it's resolved.”

If you have a credit card that offers cash-back rewards, you can earn money by doing your everyday shopping with a credit card. If you spend $1,000 and have a credit card that pays 2% cash back, you’ll earn $240 in a year without doing anything extra.

Finding the right card can be tricky, so make sure to compare fees, benefits and rewards to see what makes sense for you.

Written on January 23, 2017

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