This guest post was written by Jason Bushey. Jason is a personal finance blogger and he runs the day to day operations at Creditnet.com.
Cash or credit?
It’s a question we hear almost every time we hit the checkout counter, and one that’s increasingly tough to answer. Sure, it’s generally better to get that transaction over and done with with a loose $20 or a charge to your checking account, but it’s a fact that some transactions are safer and more rewarding when you swipe your credit card.
Why? Because credit cards are by and large a more secure way to make purchases than debit and – believe it or not – cash. Seriously – when’s the last time you received purchase protection on an item you paid for the ole’ fashioned way?
If you’re not sure which items are worth purchasing with your credit card, here are a few categories in which charging is the preferred way to go…
Using your credit card online is advantageous to paying with debit for a few reasons, but the most obvious being that it’s less risky to use your credit card for web-based purchases since it’s not attached to your personal bank accounts.
The more websites you spread your banking information on (via debit card use), the more vulnerable your checking and savings accounts become to identity theft. Credit cards are notoriously stronger for weeding out suspicious items charged to your card. Not to say banks are bad at signaling ID theft – they’re just generally not as quick to identify suspicious activity.
Plus, some credit card companies – like Discover and Chase – have some excellent online marketplaces where you can redeem accumulated cash back or points at discounted rates. So if you have cash back or rewards accrued on your credit card, you’ll save even more using your credit card.
Whether you have a rewards credit card or not, online purchases are best made with credit versus debit.
Airfare and Travel Purchases
Speaking of rewards, if you’re the proud owner of an airline miles credit card, you could be missing out on some seriously free miles by opting to purchase your airfare with debit or cash.
Few big-ticket items net you more rewards than airfare. Plus, credit card issuers like American Express and Chase offer excellent travel discounts when you redeem through their online marketplaces.
And finally, if you have an airline-branded credit card then there’s no reason not to use your airline miles credit card. Earn VIP status with your favorite airline by racking up the freebie miles and making travel purchases with your travel rewards card. (A no-brainer, but worth a reminder.)
Concert or Sports Tickets
OK, be forewarned that charging concert or sports tickets is only recommended in particular circumstances. I know this from experience – it literally took my entire senior year of college to pay off music festival tickets I splurged on for my (ex) girlfriend and I. Hello, interest fees!
That said, some card issuers (again, AmEx is one issuer notorious for this) offer some serious perks when you purchase event tickets using your credit card. For example, American Express members that carry their prestigious Gold Card (among several others) are granted access to special Gold Card Events which can include preferred seating, pre-sales and discounts to some of the best entertainment and sporting events.
If you’re eying an upcoming game or concert, check with your credit card provider to see if they offer discounts or special offers to select event tickets.
Like any items you purchase with your credit card, it’s only advantageous to use credit when you’re sure you can pay back the charge in a timely manner. Otherwise, interest rates can become a factor and all of a sudden it’s not such a great idea to use your card after all.
But if you know how to use your card responsibly and you plan on paying back your bill in full each month, then the above items are almost always more worthwhile to charge with your credit card than to pay in cash or debit.