Wise Credit Card Use
|May 22, 2012||Posted by Ashley under Uncategorized|
The following post was submitted by a guest contributor…
When Should You Use a Credit Card?
Credit card debt is a trap many people fall into, but if you’re careful and use your cards wisely, you can make the most of your credit without digging yourself into a hole. While paying cash is preferable in many cases, your credit cards will give you more help or protection than money can in some situations.
Large or Online Purchases
Credit card companies give you muscle against business you’re buying goods and services from. Since the card issuer has a record of your purchase, they can step in and help when you have a problem with the business you’re buying from.
For example, if you buy a large appliance and pay cash, you’ll have to deal with the store alone if the appliance isn’t delivered or up to standard. If you used credit, you can initiate a dispute through the card issuer.
If you make a reservation for a trip, such as a plane ticket reservation, you’ll have added protection if you used your card. Some card issuers offer travel insurance on any eligible reservations or vacation related purchases made on your card. Travel insurance protects you against some of the loss you’ll have if your trip or accommodations fall through.
Online purchases are still possible without a credit card. You can use a money order or even wire cash transfers. But if you have a problem with the product, you’ll have very little recourse unless you paid with a credit card.
The credit issuer can go after an online seller by contacting the bank your credit card funds went to. This protection is especially helpful if the seller is a private person and not a business.
While it may seem odd to associate credit card use with budgeting, you may need to spread a necessary expense out over time to avoid ruining your budget. If you pay in cash, you’re paying in full upfront. If you use credit, you can spread out the payments if you need to.
By using credit to spread out the cost of an emergency expense, you can avoid being short on your other bills and living costs. If you have to make a habit out of this, however, you may need to create a new budget and cut some costs.
Of course, you shouldn’t use your card to cover unnecessary expenses. Your credit lines should be available for you to cover emergency costs you can’t avoid, such as car repairs and not used up on things you don’t need.
Maximize credit benefits by comparing different cards. You can check financial websites for information about cards and rates available in your area. If you look at credit cards with Money Supermarket for instance, you’ll be able to see the different rates and card types before you apply.