6 Times to Use Credit Cards Instead of Cash

By Mikey Rox. Last updated 12 March 2015. 0 comments

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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. (See also: Awesome Credit Card Perks You Didn't Know About)

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.

4. You're Traveling Overseas

Bringing cash when going overseas might seem like the best way to stay on budget, but it's a dangerous way to travel. Lost or stolen cash can't be replaced. On the other hand, if your credit card is lost or stolen, you're not liable for unauthorized charges. Credit is also a good choice because some credit cards don't have a foreign transaction fee, thus allowing you to convert purchases into dollars for free. Depending on the plastic, this can save you the typical 1%-3% foreign transaction fee imposed by some credit cards.

5. You Need to Keep a Record of Purchases

Whether you're running a business or keeping a record of personal expenses, it's easier to track spending with a credit card. You can go online, pull up monthly statements, and view any transaction. With cash, your receipt is the only record, and if you misplace the receipt, you can lose track of where you spent the money.

6. You Have Limited Cash

If you have an emergency, like a home or car repair, using cash you've set aside for bills can strain your finances and cause additional hardship. Some people warn against using a credit card, especially when you can't pay off a balance anytime soon. But if you have a credit card featuring a 0% introductory rate for the first 12 to 18 months, it makes more financial sense to use credit and keep your cash available for other needs. Since you're not paying interest, it's the same as paying cash, so long as you pay off the balance during the 0% APR period. Make sure you check the credit card terms. Some credit cards only apply 0% interest to balance transfers, whereas others apply it to balance transfers and purchases.

What does a credit card instead of cash make more sense for you?

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