For decades, economists have been predicting that we would live in a cashless society. And while this may be true someday, many still prefer to use cash as a brute force method of preventing debt.Nevertheless, here are five times when even the most ardent opponents of credit cards will find them necessary:
Renting a car. While it may be possible to rent a car without a major credit card, it is very difficult. Rental car companies will require a deposit, several forms of identification, and proof of insurance. If you have ever had to wait in line behind a renter who did not have a credit card, then you already understand how time-consuming this process can be. Furthermore, most credit cards will already include some form of rental car insurance, saving you money.
Checking in to a hotel. Like rental car agencies, hotels are designed around customers who hold a major credit card. Without a credit card, guests will need to place a deposit on their room in order to insure against damages and to cover any incidental expenses. These deposits are often made as a hold on a debit card, which can take several days to clear. If travelers need to visit multiple hotels within a week, these holds can add up to over a thousand dollars.
In an emergency. Since it simply isn’t safe or practical to carry large amounts of cash at all times, a credit card is an ideal form of payment for emergencies such as car repairs and travel disruptions. Additionally, many credit cards offer travel assistance and concierge services that can be very useful in the event of personal crisis or a natural disaster. For instance, credit card issuers were able to help cardholders in the aftermath of Hurricane Sandy.
Dealing with a shady merchant. One of the lesser known features that credit card holders enjoy is the ability to request a “chargeback” in the event that goods or services paid for are not provided. And while those who pay with cash can only find recourse in the courts, customers who pay with a credit card can quickly have the charges reversed when dealing with an unscrupulous merchant or a company that has gone out of business. They must then submit documentation supporting their claim in order to make the refund permanent. And since excessive chargebacks are extremely costly to retailers, just the threat of a chargeback is often enough to convince many companies to stop fighting you and do the right thing.
When you are robbed. Simply put, there is no safer method of payment than a credit card. By federal law, cardholders are not liable for unauthorized transactions in excess of $50, but in practice, cardholders rarely have to pay for any charges made to a stolen credit card. Furthermore, the protections afforded to credit card holders are greater than those provided to debit card users. Victims of credit card theft should immediately report their loss to their banks, but when their new cards are received in the mail, their troubles are largely over.
By understanding exactly when credit card use is most beneficial, consumers can make the best decisions when it comes to choosing a method of payment.
Image: Kevin Dooley, via Flickr