You’ve always heard to stay away from using your credit card. But when used responsibly, a credit card can actually be a useful tool. With a credit card you can keep track of your purchases so you can budget better. With a credit card you don’t have to carry cash which can be lost or stolen. Using a credit card can also give a boost to your credit score. So using your credit card isn’t all that bad after all.
Here are 5 specific times when you would want to use your credit card instead of cash or a debit card.
Every month you have tons of bills such as your cell phone bill, the cable bill and your electricity bill to name a few. Setting up automatic payments is great because you’ll never again be hit with late fees. But if you set up automatic payments through your bank and your balance is low you’ll be hit with the dreaded overdraft fees.
So set up recurring payments through your credit card. This way you don’t have to worry about having a “cash buffer” in your bank account for those monthly charges that come through.
At The Gas Pump
If you use your debit card instead of your credit card at a gas pump you are putting yourself at risk. Thieves are known to install skimmers which capture your card info. They can also park nearby to get your PIN number as well. That’s why you should avoid gas pumps that are the farthest away from the clerk. The thieves install the skimmer, wait for a few victims, then collect it and take off.
While skimmers can also get your credit card information, it is much easier to charge back unauthorized / fraudulent charges on your credit card than your debit card.
When You’re Renting A Car
When you rent a car you shouldn’t use your debit card. If you use a debit card the rental agency will check your credit. They know that people with really bad credit are more likely to get into a car accident and then not pay for the damage afterward. When your credit is checked it will be a hard inquiry which will cause your score to drop several points.
Ordering Items Online
Imagine you buy something online and it never is delivered to you. Think you’re out of luck? Well if you used a credit card you are protected. Had you used your debit card you’d be out of luck. There’s a law called the Fair Credit Billing Act which allows you to dispute items in your credit card bill. Debit cards are not covered by this law however. When you don’t receive your item or it is defective, you can simply charge back the transaction and you’ll get your money back.
For Hotel Room Stays
When you check in to a hotel you are asked for a credit or debit card. They do this to have a card on file as a security deposit. They don’t want people racking up charges to their room and then leaving without paying. After getting this card the hotel will put pending charges on it. Then after your stay they will only charge you when you accrued during your stay. But had you used a debit card, these pending amounts would not be available for you to use. It could even cause you to become overdrawn on your account.