2 Reasons I Will Only Make Big Purchases With a Credit Card

Whenever I make big purchases, I put them on a credit card. Paying cash, using a debit card, or writing a check is not an option I am willing to consider. And there are two big reasons why I insist on using a card, rather than having the money come directly out of my checking account. 

1. I want protection in case something goes wrong

The biggest reason why I make big purchases with a credit card is because I want the purchase protections that only cards can offer. Specifically, if the merchant doesn't deliver the item or if it sends me something defective, I want to be able to turn to my credit card company to help me if I can't easily get my money back from the seller.

This process is called a chargeback, and I have had to use it several times when I bought items that either did not come or were not as described. In every case where I told my credit card company about a problem, it immediately took the charge off my card pending an investigation so I didn't have to pay for the item. Then I provided supporting documentation, and I was able to get back the money spent once it was clear the merchant had been a problem.

It can be hard, and sometimes impossible, to get your funds back after you've bought something from an unscrupulous seller. I don't want to lose my hard-earned cash because of someone else's dishonesty and using credit cards ensures I don't have to do that.

The good news is, you don't have to sign up for any particular kind of credit card to be eligible for this (unlike with other kinds of purchase protections that some card issuers offer, like extended manufacturer warranties). Nearly every card will allow you to dispute a charge for a bad or undelivered product and you can often submit this directly through your online account or by calling your card issuer.

You'll need to be prepared to document the problem if you want to take advantage of this protection, so keep your receipts and correspondence. If you do that, and you used a credit card when making a big purchase, you should limit your risk of unnecessary financial loss. 

2. I want to earn rewards for my purchases 

Finally, it's also a nice bonus to earn rewards when I buy something that costs a lot of money. If I spent $1,000 and I received 2% cash back, then I actually didn't spend $1,000 -- I only spent $980. The extra money can really add up over time, especially when you buy things that are very expensive or when you make expensive purchases often. 

The caveat, of course, is that I don't pay interest because doing so would cost me more than the rewards. So, if you are planning on also buying expensive items with your card, be sure you have the money in the bank to pay them off first.

Given these two important benefits of using a credit card for expensive purchases, this is the best way to pay as long as you can avoid going into credit card debt. If you don't already have a great rewards card and you're thinking of making a costly purchase, look into your options before you buy so you can get the benefits of protection from fraud and cash back or points for buying something you need anyway. You'll be glad you did.