When Should I Use a Credit Card over Other Forms of Payment?

While personal finance experts seem to spend a lot of time trying to dissuade the American public from using credit cards, they can actually be quite beneficial if used correctly. Although many abuse credit cards and put themselves into deep debt, the following are some instances when and reasons why credit should be used as opposed to other forms of payment.

Financial Safety

Paying with a credit card instead of a debit card makes it easier to protect yourself against fraud. When a debit card is used for fraudulent charges, the money is missing from your account instantly. It may take a while to reverse the charges and have the money restored to your account, which can be time (and cash!) consuming. When credit card fraud is committed, you aren’t out of money. You simply contact the credit card company about the fraud, don’t pay for the transactions, and wait for the credit card company to resolve the matter.


Credit card usage oftentimes comes with a plethora of insurance benefits many are not even aware of. Usually, if a car is rented with a credit card, the credit card insures the car against collision damage. Additionally, some credit cards provide warranties that exceed the traditional manufacturer’s warranty and enable you to take better control of your finances if a product does not live up to your standards. Most cards come with Payment Protection Plans, which ensure you will not be held responsible for fraudulent or unwarranted charges on your credit card.

Building Credit

Good credit is needed in the long run: if you have future plans to own a house or take out a car loan, it is essential you have a credit history. While it does not necessarily have to be perfect, there must be a level of credit history to your name. Debit cards do not appear anywhere on your credit history or report, so if you’d like to build credit, it is important to open a line of credit and use the card responsibly.


There are times when large purchases must be made, and you may not have enough money in your bank account to cover the costs. If you find yourself in a situation where quick and convenient cash is needed, being in the possession of a credit card can be quite helpful. In addition to being back-up cash, credit cards often provide great rewards, like frequent flier miles or rewards points that translate into gift cards, cash back, or merchandise.

By using a credit card, you won’t only be building your credit and protecting yourself against fraud, but you’ll be earning great rewards via everyday spending. Before using a credit card, be sure you can pay off the balance in whole each month to avoid high interest charges and help prepare yourself for a healthy financial future!

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