Marc Serafino
A credit card can be much more than a payment method; some of them offer an array of add-on services that could save you loads of money and even let you earn something back for the regular card usage. Also, some cards are offering free insurance.
And that’s what we’re talking about today – here are 5 ways how a good credit card could work to your benefit:
1. Interest-Free Loans
When your refrigerator or car dies out, you can’t wait forever to fix them up. If you’ve been saving and prepared an emergency fund, now’s the time to pull out something from that account. But if you don’t have an emergency account, chances are you will swipe your credit card to fund the purchase.
And here’s the part where a good credit card can be a lifesaver, providing you with an interest-free financing. There are cards out there that offer up to 21 months of introductory period of 0% APR. Such cards are best suited for these kinds of purchases. Also, there are branded credit cards that could, say, help you buy a new computer — again with interest-free financing.
As long as you pay balances in full and on time, you are good to go.
2. Get a Break On Interest Payments
If you’ve been racking up your credit card debt for some time, you may find yourself in the situation that is next to impossible to manage. What you need is some break on interest payments, and here too is a situation where a credit card with an introductory period of 0% APR could help. Get a new card, move balance from the old card to the new one, and pay off what you owe.
We realize it is easier said than done, but you gotta try.
A new credit card alone won’t do the trick, and you will have to put in an extra effort in order to clear out your debt, but this is something you simply have to do.
3. Earn Cash Back or Valuable Points
Some credit cards reward customers for their usage, offering cash back or valuable points for every dollar spent with the card. As far as credit card companies are concerned, they want you/us to use their products even if they have to pay us for it. On the other hand, some of us get easily hooked to these rewards and we end up paying things with a credit card even when that’s not in our best interest.
That being said, we love these products. But we try to use them in a responsible manner — which means paying our balances in full and on time. Otherwise, we don’t get to earn a single penny with an APR eating up all potential profits such credit cards offer.
So if you do want to earn cash back and/or points, make sure not to carry any balance from one month to the other. And if you get a card that offers points, see if you can transfer them to airline miles or hotel points for the best value. That’s how we roll.
4. Get Free Insurance
Many credit cards offer complimentary travel insurance which can come in very handy. And cost effective.
Say you need to rent a car but the company is asking for a premium for the insurance. Guess what? If you have a good credit card, you don’t need it at all, with that card including a collision damage insurance as part of the package.
Also, some cards will even reimburse select costs in the event that your trip is delayed or canceled, your luggage is lost, or you’re hurt while traveling. Hopefully you won’t be needing these extra services, but it’s good to know they are there if you do need them.
5. Protect Your Purchases
There are two ways how a (good) credit card could protect your purchases. First, you can get a free replacement on the item you have bought 30-90 days after the purchase. Also, usually as part of the same package, you get an extended warranty program that could add up to two years to your manufacturer’s warranty. That can save you a bundle on expensive service plans.
And second, there are credit cards offering price matching services so you always get the best price. Under this policy, you get a reimbursement for the difference if the price of a purchased item goes down within a specified amount of time. All you have to is submit a claim and wait for some period of time to get the price difference to your account. Pretty cool, right?
