The biggest benefits of credit cards are interest-free financing, $0 fraud liability, and the opportunity for credit building. There are also so-called “secondary credit card benefits,” which may include things like price protection, rental car insurance, and extended warranty protection. In other words, the right credit card can give a cardholder much more than simple spending power.… read full answer
Some people find it easier to avoid credit cards out of fear of making credit mistakes. But the more you learn about how credit works, the more you’ll see how credit cards are tools that can help you save money and gain access to great things, as well as make life all-around easier. Here are nine of the best credit card benefits to get you thinking.
Here are the 9 top benefits of credit cards:
Built-In Card Network Perks
The four major card networks – Visa, Mastercard, Discover, and American Express – offer baked-in benefits that many cardholders simply aren’t aware of. Visa and Mastercard have different tiers of benefits for their cards. Visa’s tiers include Visa Platinum, Visa Signature, and Visa Infinite benefits. Mastercard offers Mastercard Platinum, Mastercard World, and Mastercard World Elite benefit tiers.
Here are the card networks’ benefits at the standard level, but keep in mind that more benefits come with higher tiers.
Visa: Emergency card replacement and cash disbursement, rental car insurance, $0 fraud liability, and roadside dispatch.
Mastercard: $0 fraud liability, purchase protection, discounts on car rentals and hotels.
Discover: $0 fraud liability, free overnight card delivery, free credit score, year-end summary, the ability to freeze your credit cards, Social Security number monitoring and new accounts alerts, and the option to get cash over your transaction total during checkout.
American Express: Extended warranty, purchase protection, return protection, baggage insurance, rental car insurance, Global Assist, roadside assistance, trip delay insurance, and trip cancellation/interruption insurance.
Credit cards are the safest method of payment when shopping. All major card networks – Visa, Mastercard, Discover, and American Express – offer zero fraud liability, so you can shop knowing you won’t have to pay a single dollar for fraudulent charges. And if you lose your card, it’s easy to cancel or lock it by calling the card issuer. When it comes to theft, stolen cash and debit cards have a much more difficult process, and it may take a long time to track and recover the missing money.
Opportunity for Credit Building
Building good credit is essential to opening doors financially. Having better credit demonstrates to lenders that you are a low risk investment, which, in turn, provides access to better interest rates and loan terms. Having good credit can help you get an apartment lease, or even a job, too. If you don’t intend to finance anything, you will still benefit from having good credit available as a backup for when you need it.
Peace-of-Mind for Potential Emergency Expenses
Credit cards are great for emergencies when funds are short. They can essentially act as a small loan for when you’re caught off-guard by a car breakdown, emergency trip to the vet, or whatever life throws your way. You can pay a credit card balance on your own timeline as long as you make the monthly minimum payment.
Ongoing Rewards & Initial Bonuses
Initial bonuses are a popular perk of signing up for a credit card. You can get a set amount of cash back, miles, or points for spending a certain amount within the first few months of opening certain credit card accounts. Many credit cards also reward users with cash back, points, or miles for every purchase they make.
Cash back is typically applied as a statement credit or can sometimes be redeemed as a paper check or bank account deposit. Points can be used for cash back, merchandise, experiences, gift cards, or travel. Miles can be limited to just flights on certain airlines, at least for the best redemption value. Or, they can cover a range of travel purchases like hotels, cabs, cruises and more. For all the purchases you’re making anyway, there’s no reason to not earn a little extra back.
Potential for a Flexible Payment Schedule
Being able to carry a balance for a week or two allows for flexible budgeting. You can use credit cards to pay for everyday purchases, or even bigger bills, which lets you hang on to your cash longer. Many credit cards even let you pick your payment due date, which can be great if you sometimes need wiggle room with monthly expenses.
Free Credit Score Access
Practically every credit card offers free access to your credit score now. Though the free credit score services offered by card issuers aren’t updated as often as WalletHub’s free credit score – and they don’t give personalized credit advice – it’s still nice to see your credit score when you log into your credit card account.
Possibility of Interest-Free Financing
When you get a new credit card with a 0% APR period, you have the freedom to make large purchases and not worry about interest for a while. The average intro APR lasts roughly 12 months, ranging from 6 to 21 months. Balance transfers are also an option with most credit cards. This allows you to pay down debt faster by transferring at least some of what you owe to a credit card with a better interest rate.
It’s a no-brainer to take a credit card on an international trip. Credit cards are accepted everywhere. And when your credit card has no foreign transaction fee, you’ll save up to 9% in fees and currency exchange costs. Credit cards are also a good way to keep your funds safe, and they’re a solid backup source of money if something goes wrong. Plus, hotels and car rental agencies often require temporary holds on funds as deposits, so using a credit card for these expenses leaves your real money available when you need it.
Credit cards open the door to convenience and savings, especially as you build better and better credit. The flipside is that if you’re not careful with your finances, it’s easy to get into debt and pay extra with interest. So, again, credit is a tool that can make your life easier, but your best bet to succeed with credit cards is to learn how they work and how to use them responsibly.
The best credit card benefits are airport lounge access, statement credits for certain types of purchases, concierge services, hotel perks, initial rewards bonuses, and price/purchase protection. Not all of the best credit card benefits are available on every card, however. The higher your credit card’s annual fee, the more likely it is to contain these top-tier benefits.… read full answer
Large complimentary benefits packages used to come standard with many credit cards. But card issuers have been cutting out these perks in recent years, citing low usage. When shopping for a credit card, it’s a good idea to check the card’s latest benefits guide before applying. Below, we’ll cover the top perks to be on the lookout for in a bit more detail.
Here are 6 of the best credit card benefits:
Airport lounge access A handful of travel credit cards have this benefit, which is well worth an annual fee – if you actually use it. Cards with lounge access will grant you free entry into various airport lounges. And depending on the lounge, that could mean free food, drinks (including alcohol), Wi-Fi, charging stations, and even showers.
Statement credits for specific purchases Some credit cards reimburse cardholders for certain expenses, such as TSA PreCheck application fees, airport incidentals, restaurant purchases, subscription streaming services, and more. There’s nothing better than free money. That said, credit cards that offer statement credits for these things usually charge annual fees. So if you’re paying an annual fee on your credit card, don’t forget to check the benefits guide to see what purchases you might get reimbursed for.
Concierge services Though concierge service is among the lesser-used credit card benefits, many cards come with it. Depending on the concierge, they can help you make reservations at elite restaurants (even abroad), send you detailed maps of cities you plan on visiting, suggest places in a destination to store your luggage, or reserve presale tickets to events. Higher-end credit card concierges can do more, like help you find a sold-out gift for your spouse, or send a limousine to pick up your kids from school. No kidding.
Hotel perks If you’re a brand-loyal person who loves climbing the ladders of hotel loyalty programs, consider a branded hotel credit card. Some of these credit cards come with complimentary “elite” status, which can give benefits like free hotel nights and room upgrades.
Initial bonuses Some credit cards offer a rewards bonus for spending a certain amount in the first few months after opening an account. The average bonus amount is about 31,338 points or miles, or $230 in cash back. Spending thresholds for these bonuses usually range from $500 to $3,000. If you’re going to spend that much money on the card anyway, why not earn some extra rewards for it?
Price and purchase protection Though price protection and purchase protection benefits are becoming rarer these days, they’re still great perks to have on a credit card. Purchase protection basically insures certain purchased items in case of theft or damage for a number of days after you buy them, as long as you make the purchase with the covered card. Price protection, on the other hand, does the job of price-matching after you make a purchase. In other words, if you find an item advertised for a lesser price than what you paid for it within 60-120 days of your purchase, the card issuer will refund you the difference.
Those are just a handful of the many benefits that credit cards provide. Be sure to research and compare credit card benefits before sending in an application.
The biggest pros and cons of rewards credit cards are savings with every purchase and extra secondary benefits, on the positive side; and the potential for devaluation and earning caps, on the negative side. Rewards credit cards can be lucrative when used with precision. But they can also end up costing more than they benefit you if you pick the wrong card or carry a balance from month to month.… read full answer
Rewards credit cards are known for offering 1% to 5% back on most purchases, often supplemented by an initial rewards bonus potentially worth hundreds of dollars. Many rewards credit cards also have $0 annual fees, and some even provide the opportunity to save on finance charges with 0% APR periods.
But rewards cards have their pitfalls, too. Although cash back is straightforward to redeem, there can be a minimum redemption amount, depending on the card. Points and miles, on the other hand, have different redemption values from card to card. To add to the general confusion surrounding rewards programs, credit card companies can change the value of a point or a mile anytime they wish - and usually they don’t increase the value.
Credit card rewards can also expire based on any criteria the card issuer decides, including account inactivity, a missed payment, or simply after a certain period of time. That’s why it’s important to read the card’s terms and conditions before applying.
Biggest pros and cons of rewards credit cards:
Cash back, points, and miles basically give a portion of your purchases back to you
Rewards can expire, or be forfeited due to account inactivity, late payments, or account closure
Some rewards cards come with extra benefits like travel insurance and annual travel credits
The cards with the best benefits usually have annual fees
There are lots of rewards cards with no annual fee
High regular APRs are common - and paying interest on these credit cards quickly negates the value of rewards
Many rewards cards have initial bonuses
Some cards have earning caps on rewards
Some rewards cards have high-value points or miles
Points and miles can be devalued
You can profit if you pick the right rewards cards for your spending habits
Many rewards programs have minimum redemption amounts
Rewards cards are available to people of all credit levels
The best rewards credit cards require good credit or better
Overall, rewards credit cards are mostly a good deal, as long as you use them responsibly by not spending more than you can afford to pay each month. It’s important to pay your bill in full every month, because any money saved in rewards can be negated easily by paying interest.
Devaluation is a problem with points and miles, too, so redeem your rewards often to decrease the chance of having them become less valuable. And if you get a rewards card with an annual fee, make sure the perks outweigh the fee.
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