Credit cards aren’t all bad. In fact, knowing when to use a credit card can actually pay off later.

By Kristine Gill
Updated August 26, 2019
Credit: Getty Images

If you’re trying to get out of debt—especially if you’re trying to figure out how to get out of credit card debt—learning that experts recommend charging certain expenses to a credit card might seem counterintuitive. The truth is that there are some purchases you really don’t want to pay for with cash or debit, especially if you already have a credit card. (Opening a credit card just to cover a certain cost is a whole other conversation.)

To determine when to use a credit card, we asked two personal finance experts to weigh in on when and why charging should be your first impulse.

If you’re concerned about safety

If your card information gets compromised or shared during a transaction—or if you’re unknowingly paying an unsavory character for a service or good—it’s usually easier to get your money back if you used a credit card. That’s because the expenses listed on your credit card statement are really just a ledger of expenses you will eventually owe the credit card company; you haven’t actually lost your money yet. When you pay for something with debit, it’s like paying with cash: The money leaves your account and is gone for good.

That’s why many finance experts, including Jeff Richardson of VantageScore Solutions, say it’s safer to use credit cards. “It could be a pretty major inconvenience for you to get the cash in your bank account back,” he says.

Another problem with debit cards is that you can be held liable for some fraudulent charges. This is one of the reasons Richardson recommends using a credit card for international travel.

“Credit cards sometimes have insurances for international travel, even for purchases on rooms and things of that nature,” he says. “But there are a lot of places where you’re not going to be able to use debit cards.”

Plus, paying for purchases abroad with debit will sometimes trigger a hold on your funds that can delay payments and cause overdrafts.

If you’re looking to reap some rewards

Most credit cards—such as a travel rewards card—offer their own mix of rewards based on a points system, including cash back on certain purchases and discounts on others. Depending on what your bank offers, there are plenty of incentives to rack up those rewards while you spend.

Brian Walsh, a manager of financial planning at SoFi, says that oftentimes these rewards make it worth using a credit card.

“As long as the rewards are getting [people] more than what they’re paying in fees, then they should always be using a credit card for the rewards points and the convenience,” Walsh says. (Just be sure you know the value of travel miles and other rewards before you make a goal out of collecting points.)

Keep in mind that some merchants charge a fee when you pay with credit cards. In those cases, Walsh says it’s smart to calculate the benefit of your rewards vs. that fee and decide whether this is a job for debit or cash instead.

If you’re trying to build credit

Whether or not you plan to carry debt around, the truth is that you need to demonstrate you can accrue debt and pay it off. That’s the whole premise behind building credit.

“As a college student, my parents gave me a credit card,” Richardson says. “And the only thing I was allowed to charge was my books at college.”

Books were a good way to build credit, Richardson says, because he had to buy them (whether or not he used credit), they were only a few hundred dollars, and he could pay them off over time. Building that credit early on ensured he was in good standing with banks when he eventually looked to purchase bigger ticket items.

“You don’t ever want to be in a position of going to a lender of last resort,” Richardson says. By having a pre-established relationship with a credit card issuer, he had a readily accessible source of credit to put toward expensive necessities—think a home emergency involving a broken-down heater or a car suddenly in need of new brakes.

“Of course, it works the other way around,” Richardson says. “If you miss a credit card payment or charge too much on a card, that can affect your credit score.”

If you’re planning to use them just to build credit, it’s also important to keep your credit cards open whether or not you plan to use them regularly. To do that, Richardson recommends charging something like a magazine or streaming subscription, a low fee that reoccurs and keeps your card in good standing.

If you need help covering large but regular expenses

When it comes to home renovation projects, Walsh said you should feel free to charge expenses to your credit card if you plan to pay them off quickly, and only if you’re doing it to reap the rewards. (If you can’t afford to pay off the credit card bill, find another method of paying for the project.) Richardson says you should use a credit card only if there is a way to secure a significant discount from a major retailer. Otherwise, consider something more consumer-friendly.

“Often times a home equity line of credit offers more affordable terms,” Richardson said. (You can learn all about home equity here.)

The same goes for purchasing a vehicle. If you plan to pay it off immediately after charging it, it might be worth it. If not, many auto loan rates are lower than credit card interest rates.

Appliances, on the other hand, sometimes come with their own terms for zero interest for 12 months if you charge their purchase to a credit card, Walsh says.

For major medical bills or medical charges such as braces for your kids, consider a personal loan or a health savings account, as these are typically more consumer-friendly, Walsh and Richardson agree.

If you’re disciplined

All of this advice should come with a grain of salt: Neither Richardson nor Walsh recommend you rack up debt in the interest of getting cash back rewards or building credit. Instead, choose to use credit only if you know you have the discipline (and the cash reserves) to pay off those debts.

“Using a credit card isn’t a replacement for affordability,” Richardson says.

Walsh’s stance on charging major expenses was the same: “Yes, assuming you have enough cash to pay your bill in full.”