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Which Type of Spending Should Go On a Credit Card?

Technically, you can use your credit card for just about any expense, as long as you have enough room on your balance. You can use it to fill up your car’s tank with gas, pay for a week’s worth of groceries or manage your streaming subscriptions every single month. Did you know that there are specific expenses that you should always use your credit card for? 

When You’re Dealing with a Small Emergency:

When you’re dealing with a small emergency expense, and you don’t have enough savings sitting in your emergency fund, you should consider a credit tool like your credit card as a solution. 

Why? With the help of your credit card, you can cover the emergency expense in a short amount of time. Once that payment is accepted, and the emergency is resolved, you can direct your energy toward paying down the balance on your card. 

If you don’t want to use your credit card, you could try to use a personal loan to manage the emergency expense. You don’t have to make an appointment at your bank to do this — you can apply for your next loan online as long as you meet the qualifications. If you get approved for the personal loan, you can use borrowed funds to cover the expense shortly. After the emergency is resolved, you can focus on a repayment plan.

What are some examples of small emergency expenses?

  • Towing rates after getting a flat tire
  • Plumber’s fees after fixing a clogged toilet
  • Dental treatment costs after breaking a tooth

When You’re Online Shopping:

Whenever you’re online shopping, you should use your credit card to pay the final bill. Why? You can easily dispute credit card charges when your shopping experiences turn sour. So, if you pay for a product that never shows up or shows up damaged, and the merchant isn’t taking responsibility, you can turn to your credit card company for help. They can investigate the situation and determine whether the transaction should go through. This could save you money.

A credit card can also protect you from financial fraud when you’re online shopping. If someone steals your credit card information, you won’t be responsible for unauthorized transactions. The Fair Credit Billing Act limits your total liability for these transactions to $50. Many credit card companies offer zero liability for unauthorized charges. You won’t have to pay for anything.

When you notice the signs of fraud, you should contact your credit card company to let them know your information has been stolen. They can cancel your card and investigate the fraudulent charges that have been put on the card so far. In the meantime, they will give you a new credit card.

When You’re Buying Electronics:

Many credit card companies offer extended warranties for electronics and major appliances, which you can use to cover repairs and replacements once the manufacturer’s warranty ends. Plus, you don’t have to sign up for (or pay for) an extended warranty program through the product’s retailer. With this benefit, unexpected tech problems will be a little easier to handle. 

Another benefit that some credit cards offer for products like electronics is price protection. If the price of a product drops shortly after you purchased it with your credit card, your credit card company could refund you the difference. It could automatically reduce the amount of credit you’ve used, saving you money.

There is a slim timeline where this benefit is available. It’s typically available 1-3 months after the purchase date. 

unexpected tech problems

When You’re Planning a Trip:

Are you planning a vacation abroad? Then, you should pull out your credit card. It can be the perfect payment option for purchasing plane tickets, booking hotel rooms, renting vehicles and making foreign transactions. 

Buying Plane Tickets

Certain credit cards come with travel insurance, saving you the trouble of signing up for a private policy before taking a trip. Using your credit card to book plane tickets can give you access to coverage for problems like flight cancellation, flight delays, baggage delays and lost baggage. 

Your credit card might also help you collect airline miles or points, which you can redeem to cover travel costs like plane tickets, hotel rooms and rental vehicles. You can also redeem these points to get travel upgrades, like bumping your flight seat from the economy section to the business section. 

It’s important to note that you should never use your credit card for the singular purpose of gaining rewards. Trying to rack up rewards in a short amount of time is a risky endeavor that could push you into debt. 

Booking Hotel Rooms

If you’re booking a hotel room for your vacation, you should always use a credit card. 

Why? Hotels want you to use a credit card to make an “incidentals deposit” at the beginning of your stay. An incidentals deposit is like an insurance policy for the hotel. This deposit will cover potential expenses beyond your original room rates, like room service orders, mini-bar costs and entertainment purchases. It will also cover damages made to the room. 

If you accumulate any incidental fees during your stay, the hotel will take those fees from your deposit. Doing this guarantees that you can’t refuse these fees once your stay is done, forcing the hotel to accept a loss in funds. 

If you don’t accumulate any incidental fees during your stay, the hotel will give you back the deposit. That credit will go right back onto your card.

You can technically use a debit card to make an incidentals deposit, but it’s not a wise choice. An incidentals deposit can be quite large. You’ll be temporarily removing a significant portion of funds from your account throughout your vacation. Hotels tend to hold $50-$200 per night. If you’re staying for an entire week, that could be $1400 out of your account. 

Using a credit card for this temporary deposit is far more practical. Just make sure that you have enough available credit on the card to cover the charge. 

If your credit card offers travel insurance, you can get coverage for unexpected hotel stays with trip delay insurance. So, whenever your return flight gets delayed and you need to book a room at the last minute, you can get reimbursed for the emergency lodging costs. 

Renting Vehicles

It’s always wise to get insured when you’re driving a rental vehicle, especially when you’re in an unfamiliar destination. However, you should reconsider signing up for insurance through a rental car company. Your credit card might offer much better coverage for your rental vehicle, and you won’t have to pay extra to access it.

How can you access this coverage? First, use your credit card to pay for the rental car. Second, refuse the rental car company’s insurance coverage. This will make sure that your credit card’s coverage gets used in emergency situations. 

Making International Transactions

Credit cards can also be useful for everyday transactions when you’re abroad, whether it’s purchasing an entrance ticket to a famous tourist site or buying souvenirs at the airport.  

Credit card companies tend to provide accurate exchange rates for foreign currency. They also tend to charge lower fees than cash exchange businesses. Some credit cards offer no foreign transaction fees whatsoever.

When you find yourself in these circumstances, it’s time to put away your debit card. Use your credit card instead.

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