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5 Situations Where Using a Credit Card Could Help Your Bottom Line

Credit Card Basics, Credit Cards
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We live in a world where payment options abound. Consequently, it’s tough to know when to choose cash, credit or debit.

But have you considered that there are times when it might actually pay to use a credit card? The Nerds can think of 5 situations where using plastic could save you money or earn you big rewards. Can you think of more? Let us know in the comments below.

» MORE: Why nearly every purchase should be on a credit card

1. You’re traveling abroad

If you’re headed on an overseas vacation, carrying the right plastic could save you up to 3% on every purchase you make. How? By waiving the pesky foreign transaction fees that plague people who swipe their cards abroad.

These days, more and more card issuers are getting rid of foreign transaction fees. But yours might still carry this charge, so put in a call to your credit card company before booking your trip. If you need to shop for a new card, take a look at our list of no foreign transaction fee credit cards.

2. You’re making a purchase for work

Work-related spending should always be done with a credit card. The reason for this is twofold: If you’re planning to expense your purchase to your employer, your credit card provides a good back-up if you lose your receipts. This will ensure that you’ll end up with the money back in your wallet.

If your purchase isn’t reimbursable, it might be tax-deductible. Again, your credit card is a good way to keep track of these expenses, which will help you save big bucks at tax time.

3. You’re buying an expensive item for your home

Planning to purchase a new TV or pricey kitchen gadget? If you do so with your credit card, you could get the manufacturer’s warranty extended by up to one year. This could save you from having to shell out cash for a new product if yours fails and the manufacturer’s warranty has run out.

Just be aware that credit cards vary substantially in their warranty coverage. Be sure to review your issuer and processor’s policies carefully, and save your receipts!

4. You’re purchasing a gift

Buying gifts for loved ones can be tricky – you never know if they’re going to like the item you pick out. This is why using your credit card to purchase gifts is a good choice; some provide a benefit called return protection, which means that the processor will refund all or part of your purchase if the merchant won’t take it back.

For example, as of June 2014, Discover allows you to return qualifying items within 90 days of purchase, up to $500. This feature could allow you to recoup the costs of a gift gone wrong.

5. You’re dining out or purchasing gas

If you’re using a rewards credit card, it might have rotating bonus categories that give you the opportunity to earn extra cash-back throughout the year. Gas stations and restaurants are frequently featured in these categories, which means that using a credit card for these purchases could score you big bucks during select months.

What’s more, some credit cards offer other promotions that allow you to earn extra miles or points when you dine out. Be sure to pay attention to your card’s rewards structure so that you can take advantage of these opportunities.

The bottom line: Sometimes, using a credit card is an especially prudent choice. Doing so could save you money or help you earn extra rewards, so be sure to heed the Nerds’ advice the next time you’re in one of the situations above.

Happy credit card user image via Shutterstock