When to and when not to swipe your credit card?

Rajiv RajCreditVidya.com
Using your credit card smartly can benefit you greatly; by smartly we mean not only keeping the credit utilization ratio low but also using it at the right places.

Credit cards offer some additional or special features when compared to other options. This makes them ideal for usage in certain conditions.

When Purchasing an Expensive Item

Though it may sound contrary to what you may believe using the credit card to make a big ticket purchase could actually be a good idea. Credit card companies offer fraud protection when the card is used to make a big ticket purchase, this may come in handy if the customer wants to dispute the charge.

Travel or Refueling in Case of Co-Branded Cards

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Rajiv Raj

Founder & Director|Creditvidya.com

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In case you have a co-branded card or a special card that offers some benefits like discounts, make sure you use that card when make a transaction at the specific outlet.

Such cards are most useful when getting fuel or booking tickets or hotels especially through online portals. Using these card get you not only some privileges but also help in accumulating your reward points. Sometimes additional discount may be offered by retailers if a particular brand card is used.

When Shopping Online

In case of online shopping, if you use your debit card then the amount is debited from your account immediately and you have no protection in case of a fraud.

Since credit card transactions are processed in batches you have sufficient time to dispute the charges. Apart from this credit card companies offer fraud protection with zero liability.

When Not to Use Your Credit Card?

If you have a credit card in your wallet it does not mean that you whip it out and use it on every occasion. Do not forget to use the traditional cash option and the debit card once in a while.

In case of Emergency Cash Requirement

If due to some reason there is a requirement of cash then using a credit card should be ideally avoided. Withdrawing cash using a credit card is very expensive, most credit card issuers charge exorbitant fees on cash withdrawals made using the credit card and you have to pay a transaction charge too!

When Paying Cash Gets You a Better Deal

Sometimes paying cash is better because the seller may be offering a discount on a cash transaction or there may be times when the seller may charge extra for swiping your credit card. In such situations it’s better to use cash if available or a cheque.

Some More Times When Using a Credit Card May not be the Best Choice:

- At foreign locations since sometimes using a credit card may involve a transaction charge.

- At Fairs and Flea Markets as these shops are temporary and in case of a dispute it will be difficult to track them.

- Recurring Billing: This could prove to be headache if the biller continues to bill you even after you end your membership or subscription.