Cash or Credit?

cash-vs-credit-610x300‘Cash is king’ is the catch phrase used by financial advisors to encourage their customers to avoid borrowing and wise advice for many situations. There are several reasons why you might want to use a credit card this holiday season. One that many people are already aware of is that using a credit card responsibly helps to establish a credit history. What some consumers may not know is that some purchases should always be made with a credit card in order for them to be able to take advantage of additional warranty protection, cash back rewards and other perks from various credit card providers.

Technology, Appliances and Electronics
These purchases are typically big-ticket items that you expect to last a long time. Buy with cash and you could lose out on an extended warranty and price protection. Use a credit card and enjoy double the warranty length provided by the manufacturer and a guarantee that will reimburse you if the price decreases after you make the purchase. High priced merchandise bought on some reward credit cards, offer the added advantage of cash back.

All Internet Purchases
While cash isn’t an option to use when buying online, money orders, checks and debit cards are, in addition to credit cards. Credit cards offer the same benefits as those listed above for big ticket items and an added perk of being able to track your purchases through your credit card’s website. Some cards may offer protection, if the article you purchased online is lost or damaged in transit. Shopping at websites that include ‘https’ in the web address or display a lock icon somewhere on the browser will provide a more secure payment system. Never send a credit card account number, password or other personal information via email or text message.

Travel Reservations
One of the reasons travel reward cards are the one of the most popular credit cards is due to the focused perks and customer assistance for travelers. Purchase airfare with a card and have the security of knowing your protected if luggage gets lost or you have need of emergency medical care or roadside assistance. Lose your passport and call the number on the back of the credit card for help. EscapeSM by Discover® Card even offers trip cancellation or interrupted service of up to $2,500.  While you don’t have to use a designated travel credit card, you will enjoy more travel related benefits, bigger rewards and more opportunities to earn them.

Rental Cars
Major credit cards offer rental coverage against collision and theft, if you pay for the entire rental agreement with the card and decline the rental company’s insurance coverage. The coverage is supplemental in nature. Claims will first be sent to the cardholder’s personal auto insurer. The credit card rental coverage will take care of the deductible and other expenses that aren’t covered by your personal insurance carrier.

Overseas Shopping

Two big reasons to use credit cards when traveling overseas are generally wide acceptance and a safer form to carry than other payment types. Your purchases will have the same protections as other general purchases, large or small. Some issuers will provide a more favorable exchange rate than a currency exchange office, saving the cardholder money. Unlike cash that is gone in a moment when lost or stolen, a lost or stolen credit card can easily be cancelled, protecting your account’s integrity and your money.

The Bottom Line
Benefits vary with each credit card offer. Yours may offer cell phone insurance for paying with a card or discount tickets for major sports or entertainment venues; read the fine print. And remember that using a credit card is a convenient privilege and should never be a necessity. If you are accumulating a balance, it’s time to put the card away and use cash until you pay off the outstanding debt.


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