Many people aren’t big fans of credit cards because using them carries the risk of going into debt. In fact, you’ll sometimes see people argue that debit cards linked to a checking account are better since you still get the same convenience of swiping your card but you don’t have to risk racking up a big balance.
The reality, though, is that there are certain situations where using a credit card is undoubtedly going to be the smarter move — and not just because you can earn rewards. Here are three examples of circumstances where it virtually always makes sense to charge purchases instead of using another payment method.
1. When you’re renting a car
If you are renting a car, you are going to want to use a credit card when you do it. Otherwise, life becomes a lot more complicated.
Car rental companies prefer credit cards because they can charge your card after the fact if issues arise, such as unpaid tolls or a failure to fill up the gas tank. They can’t usually do this with a debit card since you have to enter your PIN for the transaction to go through.
Since a car rental company takes a bigger risk of renting to you if you don’t have a card on file, you’ll usually need to make a deposit of several hundred dollars or will be subject to a hold in the amount of the estimated rental car charges when you pick up the vehicle. In other words, you’ll tie up a lot of money.
This can be avoided with a credit card. Plus, some of the best credit cards come with rental car insurance, so you can get protection in case of loss without having to pay the car rental company extra for it.
2. When you’re booking a trip
If you are booking travel, it often pays to use a credit card. Many credit cards offer a whole host of perks and protections, including trip interruption or cancellation insurance and protection against lost luggage. These cardholder perks can save you a fortune if something goes wrong with your vacation.
If you are a frequent traveler, you can also get benefits that make your trips a lot more fun if you sign up for the right card. These could include perks like upgraded airline seats, access to airport lounges, priority boarding, or early check-in at hotels.
Check out our picks for the best travel cards and sign up for one today to start taking advantage of these and other great benefits. You may even be able to find a card that offers you a generous sign-up bonus that makes part of your next vacation free.
Finally, if you are shopping online, you should be using a credit card to do it. That’s because credit cards offer way better fraud protections, which is vital in this day and age when it seems like a new data breach happens every day.
While there are laws protecting against losses in case of fraud when using both debit and credit cards, the protections are much better for credit cards. If you don’t report the loss or theft of a debit card in a timely manner, you could face virtually unlimited liability for fraudulent transactions. But the maximum liability for credit card fraud is either $0 or $50 depending on how quickly you report issues.
Some credit cards also offer additional protections in case of other problems, such as return protection if a merchant doesn’t want to take back your item.
In all of these situations, a credit card is your best bet. Check out our picks for the best credit cards to find one offering the rewards, perks and protections you need and be sure to use it the next time you book a trip, rent a car, or buy something over the internet.
