Credit cards come with several hidden benefits. Are you aware of some of the perks of using your card? Credit card companies offer multiple perks to help you get the most out of your card.
Credit cards make purchases and paying your bills easier. Using a credit card is also a good way to boost your credit score.
However, failing to manage your credit cards properly can lead to a lot of unnecessary expenses.
Check the terms of your credit cards to learn about the benefits of your credit card.
Benefits of Credit Cards
Did you know credit cards often offer roadside assistance that is similar to AAA?
- This perk varies greatly based on your credit card provider. Companies either offer free service or a paid service. You’ll have to carefully check the policies as you sign up for this perk.
- If you’re stranded and need help, roadside assistance can come rescue you.
Did you purchase an appliance or electronic device with your favorite credit card? Your credit card may extend your warranties.
Protection from cancelations.
Did you miss your concert or play? Credit card companies can refund the money you spent on tickets. However, you have to use the card to make the initial purchase.
Even if it’s your fault you missed an event, you might still get a refund. Some carriers only provide this service, so check your card before you claim this benefit.
Exclusive access while you travel.
The fancy airport lounges can be yours if you have the right card.
- Credit cards can offer you the chance to stay in the best airport lounges and hotels, at no extra charge. These exclusive offers vary greatly based on your card, but many of them will grant you special access. Enjoy a unique cocktail or appetizer while you wait for your next flight.
Extra help while you travel.
The lounges are not the only travel benefit. If you have an emergency while you’re traveling, credit cards can help you. In addition, they offer services such as insurance to help you if your luggage disappears or your phone is lost.
- Companies can offer assistance in several ways. They may replace the luggage or send you money so you can replace it yourself. They may also help you track down the luggage.
Replacing stolen items.
Was an item you purchased stolen?
- If one of your purchases is stolen, credit cards can help you. As long as you paid for the item with the credit card, you can report it to them. This will vary by provider, so check your card.
- Items that can be replaced vary from electronics to furniture. However, not everything is covered. For example, stolen food isn’t covered by most cards.
Help returning items.
The sweater you purchased is too pink, and the shoes are too tight. Your credit card can help you return these items.
- If the person or business refuses to take back the items, then the credit card will refund it anyway. This is done within 90 days of the purchase.
- You’ll need to save the receipt and tags to ensure everything is covered.
- Credit cards limit the total amount of money that can be refunded, so extremely expensive items are usually not covered. In addition, some items like food may not be a category that falls into the help section.
The benefits of credit cards are often hidden in the fine print. However, you can benefit greatly by being aware of these benefits.
Attention: The benefits of credit cards are many, if you manage them correctly!
If you’re tempted to buy things you can’t really afford just because you can charge them on your cards, it will benefit you to leave them at home when you go shopping. Then, when you have an emergency, rely on an emergency fund to avoid charging unplanned expenses on your cards.
Selecting a credit card that’s right for you is also important. This can be difficult since the cards you qualify for are limited by your credit score. Compare credit lines, APR, and other fees to determine which card will work the best for your circumstances.
Manage Credit Cards
The benefits of credit cards are many, but you should follow these tips to avoid spending a lot on fees and interest while boosting your credit score:
Pay your bill on time, and pay more than the minimum.
Not only will you avoid late fees with this strategy, but you’ll also pay off your balance quicker, thus saving money on interest, too.
For example, if you have a $500 balance on a card with a 15% APR, you would end up paying $595 over two years if you make the minimum payments of $20/month.
However, if you make payments of $50/month instead of the $20 minimum payment, you would end up spending a total of $528 to pay off your balance in a little less than a year.
Be consistent with your payments. Missing a payment or paying less than the minimum will negatively impact your credit score.
Keep your balance as low as possible.
Your credit score goes up if you keep your balance relatively low compared to your available credit line. Ideally, your balance should be less than 30% of your available credit line.
Avoid maxing out your credit card or making large purchases unless you plan on making a significantly larger payment to cover these expenses.
Consider applying for a credit line increase if you cannot pay off enough on your card to stay around the 30% mark.
Read the fine print on rewards cards.
Credit card providers typically charge higher APRs and fees to compensate for the cashback and other rewards.
The best strategy for using a credit card with rewards is to make enough purchases to qualify for the rewards but then pay off your balance in full every month to avoid paying interest.
Manage Credit Cards by Keeping it simple.
Owning too many credit cards can make managing your accounts difficult. As a result, you’ll be more likely to miss a payment.
Limit your cards to 1 or 2 cards, and manage your finances to avoid spending a lot from them.
Be careful with balance transfers.
This can sound like a good option if you qualify for a credit card with lower fees and APR. However, most credit card companies will charge you a transfer fee, usually a percentage of the debt you are transferring. So paying 3% of the amount you’re transferring to get a slightly lower APR might not save you money.
Avoid cash advances on your credit cards.
A cash advance can be a tempting option because this cash is straightforward to get, but you’ll have to pay a fee and will have to make larger monthly payments to compensate for this charge. In addition, cash advances often have a higher rate of interest as well.
These tips will help you stay on the right track with your credit cards. Remember that you can easily avoid fees and spend less on interest by being responsible and planning your expenses and payments. After all, the benefits of credit cards are high, but you should be responsible for using one.
Shop around for a better credit card every two years or so. You will qualify for better products as your credit score improves from following these strategies.