The Hidden Benefits of Credit Cards
I was recently organizing my office, a never ending task, and I noticed a document in my Bank Debit Card folder labeled, Worldwide Automatic Travel Accident & Baggage Delay Insurance. To summarize, this flyer informed me that if I paid for travel with this card and suffered loss of life, limb, sight, or baggage that I or my survivors could be eligible to collect up to $250,000.
Now I’d been an American Express card holder for years so I was well aware of benefits that accrue with membership. I was a bit surprised to find that even a relatively, lowly debit card can provide substantial and kind of hidden benefits.
What Other, Hidden Benefits Do Credit Cards Offer
Here’s a quick run down on other benefits that your credit and debit cards may offer:
1. Buyer Protection
Many cards offer purchase protection that replaces items purchased with them if stolen, broken, or lost within the first month or 2 after purchase.
Smart Credit Card Strategy: Even if you have the cash to pay for an item, particularly high priced purchases, you might want to put it on your card in order to gain this protection and use the cash to pay off the card at the end of the month.
2. Check No to Pricey Theft and Accident Coverage When Renting Vehicles
This, for me, is a no-brainer. Assuming you’re carrying the right card, you should know that many cards protect you against accidents and even auto theft when renting a car using a credit card. If you travel a lot for business or otherwise, it pays to have a card with this benefit attached.
3. Damn, I Dunked My Smart Phone in the Toilet Again.
Okay, I didn’t but my wife has, twice, both times after the warranty expired! No problem if I was as smart as the phone and purchased the phone with a card that carries an extended warranty benefit. With this benefit that one year or less warranty may automatically be doubled, for free!
Smart Credit Card Strategy: Use a card with an extended warranty feature when purchasing high value electronic and other items where replacement is both an inconvenience and expensive!
4. Save Money with Credit Cards
Many cards want to encourage their use by teaming up with local and national retailers to offer sometimes significant discounts when used at partner locations. You’ll often get notification of these savings in your monthly bills and can find additional information on card websites.
Smart Credit Card Strategy: When offered a discount, be smart. Ask yourself, 1.) do I need this and 2.) do the research to see if you can get a better deal elsewhere. If I save 5% on a $100 printer at Staples that I could have bought for $89 at Office Depot then I didn’t really score too great of a deal, did I?
Get Smart About Credit Card Usage
Understand what benefits accrue to what cards and devise a credit card strategy that assigns different types of purchases to the best card for that purchase. E.g., use a card with great travel benefits to purchase airline, car rental and other travel related items and use a card with an extended warranty feature to purchase your personal electronics, particularly those that are easy to steal or damage.
And keep in mind that the best time to use a credit card is when you don’t need to and you are able to pay off the card balance at the end of the month. Following this strategy will help you realize all of the benefits of using a card with none of the negatives (interest, anyone?)!