Never Use Cash for These 11 Things

By Elizabeth Lang. Last updated 3 October 2014. 0 comments

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Some people only make their purchases in cash in order to avoid accumulating debt. Others swear by credit cards in order to earn rewards. But most people use a mix of cash and card. So which purchases should you never use cash for? (See also: Top 6 Reasons Cash-Only Rocks)

1. A House

There are few people who can afford to purchase a house outright, but even if you can, it may not be the wisest financial decision. Mortgage rates are at all time lows, and so you would likely be better off using the cash you would otherwise pay for the home to invest in the stock market. And obtaining and making payments on a mortgage is good for your credit history. Plus, mortgage interest is tax deductible.

2. Appliances

Many credit cards offer extended warranty protection, which is insanely helpful for appliances that are prone to breaking. This means that if your $300 above-the-stove-microwave breaks after 18 months (six months after the warranty expired), you can contact your credit card company and they will issue you a refund. This exact thing happened to me, and I got all my money back, and now I make sure to purchase all my appliances on a credit card which has warranty protection. (See also: How to Use Your Credit Card's Free Extended Warranty)

3. Items From Stores With Short Return Policies

Some stores only offer a two week or 30-day return policy. If you pay cash and want to make a return past this period, you're out of luck. But many credit cards offer 90 day return protection, which means that if the store won't take back the item on day 89, the credit card will refund your money. (Note that usually you are required to ship the product you can't return to the store to the credit card company.)

4. Clearance Items

Many stores have no refund policies for clearance items (typically marked "all sales final"). For the same reasons as for stores with short return periods, by using a credit card with 90 day return protection instead of paying cash you'll protect yourself if the item doesn't work out.

5. An Item You're Likely to Break or Ruin

Another of my favorite credit card perks is "buyer protection," a form of purchase protection that protects you if you lose or break an item within a certain time of purchasing it (typically three months). If you're buying an expensive item or something you could break, ruin, or get stolen, then charge the item to a credit card.

6. Medical Expenses

Medical expenses are subject to certain tax breaks and thus it's best to have a record of them. Whether you're claiming a deduction because you've accumulated expenses greater than 7.5% of your income, or you have a Health Savings Account (HSA), you must keep a record of your purchases. While the IRS may not accept a credit card bill (the rules on this are a little complex), it doesn't hurt to have the card bill if the tax man comes knocking at your door. More importantly, using a credit card will help you keep track of expenses so you can make the claim when the time comes.

7. Charitable Donations

Like with medical expenses, putting charitable donations on a credit or debit card will help you keep track of the expenses for tax purposes. Use a budgeting tool like to easily help you compile your deductions at the end of the year.

8. Purchases at a Store Where You Shop Frequently

If you spend at least several thousand dollars each year at certain stores, it may be worthwhile to get the store's credit card to save you money. For example, a Target Card saves you 5% on every purchase and an card gives you 3% in rewards. Certain department stores even offer special coupons or savings events for their cardholders. (See also: Store Credit Cards That Don't Suck)

9. Recurring Purchases

If you have recurring debits set up for payments on your water bill, cable TV, phone, utilities, or anything else, you should charge it to a credit card and not have the amount debited directly from your bank. Why? If you have a dispute over a charge, you can file a dispute with your card company and immediately get your money back. (If you file a dispute with your bank over an automatic withdrawal from a checking account, you have a much harder battle to fight.) I know someone who recently cancelled an insurance policy, but the company continued to debit her checking account anyway. Had she charged it to a card, it would have been far less hassle to sort out because the credit card company would do the fighting for her.

10. Airline Tickets

When you book your plane ticket using a credit card, you're likely eligible for a whole host of related benefits including: Baggage Loss Protection, Passport/Credit Card Loss Protection, No Baggage Checking Fees, Free Airport Lounge Access, Lost Luggage Tracking Assistance, Emergency Translation/Interpretation for Medical Emergencies, and Emergency Medical Transportation Assistance. Chances are you won't need to use any of these protections, but if you do run into a sticky situation, these protections will make a huge difference. (See also: Best Travel Reward Credit Cards)

11. Car Rentals

Want to save a lot of money on rental cars? Decline the additional insurance offering and rely on your credit card's insurance instead. Besides car rental insurance, using a credit card for renting a car may also entitle you to additional car rental discounts and roadside assistance.

Note regarding credit cards: Many of the protections listed above vary by credit card, so be sure to check with your card company to see what benefits you're entitled to. And these benefits assume that you're paying your card in full every month; if you're not, the additional interest you accumulate may not offset the benefits of paying with a card.

What other items do you never use cash to buy?

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