You might prefer to use cash if you’re not a big fan of debt, but don’t give credit cards the cold shoulder so quickly. Believe it or not, there are times when it makes more financial sense to use a credit card than to pay in cash. Yep, you read that right. If you know how to use credit responsibly — and if you’re committed to only buying what you can afford — there are benefits to enjoying that satisfying swipe. Here are six times it’s better to pay with plastic.
1. Buying Electronics
Whether you’re buying a flat-screen TV or a small appliance for your kitchen, the retailer will probably offer an extended warranty at checkout. If you’re spending hundreds or thousands for an item you intend on keeping a long time, buying an extended warranty makes sense, especially since many manufacturers only offer a one-year warranty.
If you’re thinking about getting an extended warranty, this isn’t the time to pay for an electronic appliance with cash. It might come as a surprise, but several credit cards offer extended warranties for electronics as a cardmember perk. Use an eligible card to pay for an item and you might receive a free extended warranty that matches the manufacturer’s warranty up to one year. Coverage varies by credit card, so contact your credit card company in advance to know your limits.
2. You Want the Best Price for an Item
There’s nothing more frustrating as a savvy consumer than buying an item — only to find it cheaper somewhere else (which is why you should also comparison shop online first). But there’s an easy way to save yourself the headache of exchanging items you’ve overpaid for: Since many credit cards offer price protection, simply pay using your plastic. If you make a purchase in retail stores or online, and later find the same item at a lower price within a specific length of time (usually 90 days), your credit card company may refund the difference up to a certain amount. Not all credit cards offer price protection, so you’ll need to read your cardmember benefits to see if you’re eligible.
3. You Want to Earn Rewards
Reward credit cards open the door to a variety of freebies, ranging from airline tickets to merchandise. Use a rewards credit card and earn points or cash back for every dollar you spend, then redeem points for travel, gift cards, or even a statement credit. You don’t receive these types of perks when paying with cash. Just make sure you pay off your balance every month to avoid high-interest debt.
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