5 Times When Using Your Credit Card Makes Sense

There are plenty of reasons to be cautious about using a credit card. For one, consumer debt is rising, and many people are looking for credit cards to pay for everyday expenses.

But if you use your card wisely and you can pay off your balance each month, there are times when using a credit card makes a lot of sense. Here are a few of them.

1. To receive a generous welcome offer

Some of the best credit cards offer cash bonuses up to hundreds of dollars or thousands of reward points you can use toward airline tickets or hotels. These cards are an excellent option if you have an expensive trip coming up that you need help paying for.

I found a rewards credit card that gives you 75,000 free miles once you spend several thousand dollars in the first few months of having the card. That bonus could go a long way toward helping you pay for an international trip.

It's worth mentioning that some rewards cards have annual fees and spending requirements to qualify for the welcome offer, so read the fine print carefully.

2. To protect your online purchases

One huge benefit of using credit cards over debit cards for online purchases is that all major credit card issuers offer $0 liability protection.

This means that if your credit card information is stolen, you likely won't have to pay for any fraudulent charges. When you make an online purchase with a credit card, the money used to pay for it is technically the card issuer's, not yours. This protects you against fraudulent purchases and makes using your credit card safer than using a debit card.

3. For business purchases

Small business owners know that managing cash flow can be tricky. It's not uncommon to wait for customer invoices to be paid while needing to cover a significant business expense.

In these instances, business credit cards can be a lifeline. Many of these cards offer cash back rewards, which can make those significant expenses less painful. And some even have $0 annual fees and offer high credit limits.

Many business credit cards also report your payments to business credit bureaus, which helps you build a business credit profile.

4. To receive a 0% balance transfer offer

Many balance transfer cards offer a 0% introductory APR rate, usually for a set period of six to 21 months. These low-rate cards are helpful if you have a significant credit card balance you need to pay off.

For example, paying $200 per month on a credit card balance of $4,000 with a 21% APR will take 25 months to pay off, and you'll spend about $966 interest. However, if you get a balance transfer card with a 0% APR for 21 months, you'll pay it off in 20 months and spend $0 in interest!

Just be aware that most cards charge a fee of 3% to 5% of the total balance transferred.

5. You want to maximize your consumer protections

I already mentioned that credit cards can help protect you against fraudulent charges, but they also go a step further to protect you after you've made purchases.

Credit card companies have to abide by the Fair Credit Billing Act, which helps protect you from charges for goods you never received or, if you have received them, weren't as described (like a broken refrigerator).

For example, the Federal Trade Commission (FTC) says that if you purchase an appliance and it doesn't work correctly, you can dispute the charge with your credit card company if the seller doesn't work with you to fix the situation. Just be sure to dispute the purchase within 60 days, that item or service costs more than $50, and file your complaint in writing.

It can be easy to overuse credit cards and get in trouble with debt. But if you use them correctly and pay off your balance on time, they can be a great way to earn rewards, cover business expenses, and give you valuable consumer protections.