When you make an expensive purchase, there’s one particular payment method you should always use: a credit card.
Of course, you should do this only if you can pay off the balance in full before the billing cycle ends so you don’t get stuck paying high interest charges on your costly purchase. But as long as you’re able to pay off the card balance out of your bank account before accruing interest, there are five big reasons why a credit card is the best payment method for anything expensive.
1. Credit cards can help you fight fraud
Credit cards provide you with strong protections against fraud. If a merchant doesn’t send you a product that you purchased, or sends you something that is different from what you ordered, you can dispute the charges.
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You’ll need to reach out to your card issuer to let it know of the issue, such as an undelivered item or a disappointing product or service. You may also need to provide documentation. The card issuer will launch an investigation, ask the seller for details, and ultimately take action.
If the card issuer is convinced you were defrauded by the merchant in some way, it will institute a chargeback and reverse the transaction. You will be able to recover the money you paid. That’s a huge benefit that virtually no other payment method can provide you.
2. Many cards come with purchase protection
Purchase protection, or damage protection, is a common credit card perk and also provides solid justification for always charging expensive purchases.
Depending on the card, purchase protection may offer you protection if the item you bought is lost, damaged, or stolen. You could potentially be eligible for tens of thousands of dollars in coverage for the expensive purchases you’ve made. This means if you drop that brand new tablet or your new watch is stolen, your card issuer could be there to help you recover your funds.
3. Return protection is another common cardholder benefit
Another big benefit that some cards offer comes in the form of return protection. Basically, if you need to return an item and the merchant won’t take it back, your return protection could reimburse you.
This protection could last for months after purchase and entitle you to hundreds or even thousands of dollars in reimbursement, depending on the card.
4. You may become eligible for an extended warranty
If the expensive item you are buying comes with a manufacturer’s warranty, your card may extend that coverage period. Sometimes, you’ll get an additional year or two of coverage.
If your item breaks after a short period — which is far too common once warranties are up — your card will be there for you.
5. You can earn rewards on your purchase
Finally, you can get rewarded for your expensive purchase, which could help defray some of the cost. Say, for example, you have a card offering 5% cash back and you charge an expensive $1,000 item on it. You’d get back $50 just for using the card to buy it.
For all of these reasons, charging expensive purchases is a no-brainer. If you’re buying something big, use your credit card — and then pay it off in full so interest charges don’t negate the advantages that using a card can offer.
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