The standard school of thought says to use credit cards when it is a necessity and to avoid using them at all other junctures. While it is generally a good rule of thumb to avoid placing unnecessary purchases on the credit card, there are plenty of instances where using a credit card is a better bet than paying in cash or using a debit card. Credit cards often come with more extensive protection and rewards systems and can work out to be a better option for payment depending on the item. The following tips outline these scenarios and will help you better understand how credit can be beneficial to you in more ways than just being able to purchase items.
Online Purchases
When it comes to making purchases online, you and your identity are always in danger of being compromised. One wrong move and all of your personal information can be accessible by thieves, leading to untold damage to your finances. Credit cards offer charge-back and fraud mechanisms that keep you safe. It is highly recommended to make any online purchase with your credit card as opposed to a debit card, giving you more leeway to complain if the item in question arrived damaged or doesn't arrive at all.
In-Advance Purchases
If ordering items from a catalog or fundraising event, it is always recommended to use credit cards as a form of payment in order to protect yourself against scammers. Many dishonest individuals will attempt to sell individuals items from a catalog, only to never deliver on the items. Using a credit card gives you the protection you need to counter this possibility, all the while keeping your bank account and debit card out of the scenario.
Recurring Payments
If you have set your bills up on an auto-pay system, it may be in your best interest to do so with a credit card and simply pay the balances off with your debit card each month. Auto-pay systems can become complicated if your account is overdrawn and ends up returning NSF, leaving you in debt to the bank and possibly in trouble with your monthly bills. By using your credit card, you can always be sure that your payments will go through and you never have to worry about handing over your personal bank account information.
Travel, Gas & Accommodations
For those constantly on the go, credit cards make a better solution and can actually benefit you in these circumstances. Many credit cards offer cash-back or bonus points for purchases made on fuel, hotels and travel arrangements; getting 1-5% cash-back on these items is far better than simply breaking even with traditional debit cards and cash transactions. As always, it also keeps your core financial information out of circulation and makes you less likely to suffer from identity theft.