Give yourself rewards, extended warranties and additional perks by using your credit card for major purchases.

Smart financial planning means saving up for a major purchase and not pulling the trigger until you have the cash on hand. But sometimes there’s no reason you need to use cash (or a debit card) to actually make the purchase when there are so many benefits to using a credit card. Savvy consumers know what to buy with a credit card to take advantage of credit card rewards, extended warranties and fraud protection.

1. Appliances and Electronics

Big-ticket items like a new refrigerator or sound system are prime examples of purchases that you should consider making with a credit card. Some cards can offer extended product warranties, price protection and purchase protection. So if the fridge starts leaking within six months, you see it on sale a month later or your teenager manages to immediately break the ice dispenser, you may be able to enjoy free repairs or money back. Be sure to read the terms of your card’s benefits carefully before making a purchase so you understand what is and what is not covered under your card’s coverage.

And that’s not to mention rewards. Your new television and sound system costs the same whether you pay in cash or credit, but when you use cash, you don’t earn a percentage of that purchase back in rewards like you would with some credit card reward programs.

2. Travel Plans

Many people have no idea their credit card may offer a variety of travel services. Be sure to research what your card has to offer before making travel arrangements. You may find that booking with a credit card gives you access to rental car insurance, travel interruption insurance and even assistance with locating lost baggage or re-booking tickets.

Travel rewards cards also provide cash back, points or miles for every booking (and some for everyday spending as well). Cardholders can rack up rewards to use for a dream trip, while traveling for business or even just using the card for day-to-day expenses.

3. Car Rentals

The majority of car rental companies won’t accept a debit card to secure a reservation, so you may not have a choice but to use your credit card. Even when other options are available it’s best to book with your credit card as many offer additional insurance. Always research what your existing auto insurance policy covers on rentals along with additional coverage from your credit card before accepting the rental company’s insurance. Otherwise you could end up paying for coverage you already have.

4. Big-Ticket Purchases Online

With the rise of e-commerce, more and more people are making major purchases such as furniture or appliances online. While it’s certainly convenient to comparison shop for a dining room table from the comfort of your living room instead of running all over town, there is a risk of identity theft on the Internet. Using a credit card instead of a debit card for online purchases provides additional protections.

The Fair Credit Billing Act and the Electronic Fund Transfer Act provide some protection for consumers against unauthorized charges on both credit and debit cards. However, your liability for unauthorized charges on a credit card stops at $50,while liability for charges on a debit card can go up to $500 if you wait to report the loss or theft more than two business days after learning about it and less than 60 calendar days after your statement is sent to you. Your liability could be even more if you wait more than 60 calendar days after your statement is sent to you.  Even when you’re reimbursed for false charges on a debit card, there may be a waiting period before receiving your money back because the funds are already withdrawn from your account. 

Many of the top-rated credit cards offer additional protection from fraudulent charges. For example, Discover monitors every purchase and alerts cardmembers of any unusual activity 24/7 through email, phone or text, and cardmembers are never responsible for unauthorized purchases on their Discover Card.

Of course, all of these recommendations only apply when you have the cash to pay off the big purchase in full by the payment due date. Never use a credit card for a purchase you can’t afford just to earn rewards or perks. Also be cautious about making purchases anywhere you’re concerned about the security of your card, such as non-encrypted websites.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.