The decision between using cash or credit is not always an easy one, and there are definitely instances where cash is the better choice. Those small, day-to-day charges, for example, should be paid for with cash because constantly relying on plastic for these seemingly small purchases can lead to a large bill at the end of the month. Those who have trouble spending within their means may also want to use cash almost exclusively as this is the best way to stay out of debt. For those capable of responsible use of credit, however, there are multiple situations in which people should use credit rather than cash.
Beating Store Return Policies
One area in which credit cards are useful is defeating the sometimes short return policy length of many popular stores. Since 90-day return is often a credit card policy, shoppers may want to use credit to purchase products from stores that they might want to return outside of that one-month window. Shipping the item to the credit card company may be required, so this should only be done with merchandise that is easy to ship.
This strategy may also be effective with purchasing clearance items since stores often will not take back items sold via clearance. Many credit cards, however, offer 90-day return for clearance items, meaning that “all sales final” does not necessarily refer to the person who used plastic to buy one clearance item too many or a clearance item that turns out to be defective.
Getting a Better Warranty
As with return policies, credit card companies also often offer better warranties than manufacturers or stores. People who are looking to buy appliances especially may want to consider using credit to buy appliances or other similar items in order to take advantage of the extended warranty often offered by the credit card company. If a store offers a warranty of up to a year on a new range, for example, then using credit rather than cash to buy the range could result in a warranty that would cover a breakage after, say, a year and a half.
Buyer protection is a similar concept in that it, as the name implies, protects the buyer from breakage, loss, or theft of a particular item for up to several months after purchase. Expensive items, things likely to be stolen, highly fragile items, etc. may be good options for credit card purchase in order to take advantage of buyer protection. This may also be useful for items that do not come with a warranty but still might easily break or get stolen.
Keeping a Record of Transactions
Another benefit of using credit is that it provides a record of transactions. Disputes often arise over whether a person has paid this bill or bought that item, especially when the person uses cash for the transaction. Credit, however, leaves a paper trail—or at least a digital trail—which can greatly assist with such disputes or with record-keeping for tax purposes. Medical expenses, for example, are often hefty expenses that may be tax-deductible. Paying for such things with credit leaves a digital/paper record that is, if not legally binding to the IRS, at least helpful to the citizen for figuring out tax expenses.
Donations to charity should also be paid for with credit if possible since doing so would also leave an easily traceable trail. Taxes become that much easier to do when the person has easy access to credit records with the donations clearly labeled. Using credit here could help users get the most out of their tax deductions by having a clearly-labeled donation total.
Getting the Most out of Regular Purchases
Routine expenses are a fact of life, and paying for them with credit can make life much easier. If a service provider disputes a claim of payment, the record of payment via credit will be easily provable for the customer. Automatic withdrawal disputed claims are difficult and time-consuming, while credit card companies may honor a request for resolution of such a case more quickly. Also, the credit card company makes a more formidable opponent than the average customer, and businesses do not generally want to go to battle with credit card companies.
Those who routinely purchase items from popular stores that offer credit cards may want to consider using store cards instead of regular cards for purchases. Those who have trouble paying off credit balances on time may not want to go this route as in-store credit cards often have significantly higher interest rates than regular cards, but responsible credit card users may be able to get fairly significant savings via discount offers and points rewards for cardholders.
Buying a House
Not many people have to worry about being able to buy a house with cash due to the sheer expensiveness of even a relatively cheap house, but credit is the vastly superior option anyway. Paying on a mortgage is good for credit history and mortgage rates are fairly low, meaning that any cash put towards a house would be better off invested wisely than put towards a house. Mortgage interest is also tax deductible, which goes back to the notion of keeping a record of certain types of transactions.
Credit card companies often offer a wide variety of services and protections in regard to travel options, so paying with credit over cash often makes the traveling experience better. Renting a car with a credit card may grant the customer special discounts and offers; insurance offered by the credit card company may be cheaper than and superior to that offered by the rental company itself. Paying by credit can also leave another records trail, assisting the customer with any necessary claims.
Purchasing airline tickets via credit can offer even more perks such as baggage protection and packing, free baggage checking and lounge access, and emergency situation assistance. Many of these services will not likely be needed, but people who end up needing these services often did not expect to need them beforehand. Besides, purchasing peace of mind can enhance a traveler’s enjoyment of a vacation.
All credit cards are different, so credit card users should read the fine print on their contracts and find out what benefits the credit card company offers them. Many of these savings will only actually be savings if people pay their bills off by the due date and avoid late fees; otherwise, the fees charged may override any potential savings. A little bit of research and diligence can increase a credit card user’s savings and provide more benefits than cash.
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