Credit cards get a lot of coverage as to why they are bad for you and if used improperly they can be. Many times, the benefits of credit cards get overlooked and we are going to focus on those today.
1) Rewards
The most well-known benefit that credits cards can provide are rewards. Rewards can be earned in terms of points, cash back, airline miles, or other perks. Benefits can add up to around 1-3% of the dollars you spend. Depending on how much your family spends every month this can add up. There are many resources out there that can assist you in determining what card will provide you with the best benefits for the reward type you are looking to earn. We suggest that you do your homework and obtain a card that is going to provide you with the best rewards for your needs.
2) Extended Warranty
An extended warranty is a benefit that many cards contain for their cardholders. Have you ever bought something only to have it stop working or break right after the manufacturer’s warranty expires? We have had this happen on several occasions. This credit card benefit will extend the warranty, typically by an additional one or two years, on the product beyond that of the manufacturer. A product purchased on the credit card with this benefit that breaks after the manufacturer warranty but before the extended coverage expires can be covered under this benefit. Each card has certain requirements that may need to be met, so you will want to check with your card, but as long as your product qualifies the insurance will either refund or replace the product. In most cases, you will need a copy of the original receipt and paperwork documenting the original manufacturer’s warranty.
3) Protection
Return and loss protection are two great benefits that I am going to put together. Return protection will allow you, on some items with certain limitations, to return a product after the retailer’s return policy would allow it. Loss protection will allow you to file a claim for a product that was purchased and subsequently lost, or stolen, in a specific period. Recently we had purchased a new golf club that was lost on the course while playing. After looking for the club, contacting the clubhouse, and trying to locate it we were unsuccessful. Ultimately we submitted the claim with our credit card company and received a full reimbursement and simply purchased a new club.
4) Free Credit Score
Free credit scores are a benefit of many credit cards. As we have discussed several times, your credit score is one of the most important numbers in your life. Having this benefit will allow you to monitor your score without having to submit a report or run your credit to take a look. Some credit cards include your score on their monthly statements or when you log into their site. This provides an easy way to stay on top of your credit on a regular and ongoing basis without the cost.
5) Travel Benefits
Travel benefits are some of the most widely used benefits that a credit card provides. We have personally benefited from many of these benefits. One perk that we take full advantage of, being an AMEX Platinum cardholder, is the access to the Centurion Lounges and the vast network of reciprocal lounges they provide. It is a simple way to take a break, grab a hot meal, stretch, and even take a shower in some locations. Having this makes those long trips a bit easier and feel shorter. The video above was filmed in the Centurion Lounge at JFK in their Speakeasy, yes they have a Speakeasy. Next time you find yourself traveling through JFK make sure you check it out.
These are just simply a few of the many benefits that a credit card may provide. Each card is different and you will want to make sure to choose a card that meets your needs. It is important that you manage your credit appropriately and only use it as a tool to make purchases that you would normally be able to afford.
It does not make sense to charge a purchase to obtain these benefits if the card cannot be paid off at the end of the month. This will create a situation where the interest you will pay will far exceed the benefits received and this is what the credit company is betting on.
Use the card responsibly by charging your expenses, paying it in full at the end of the month, and reap all the benefits the card will provide. Get familiar with the benefits of your card, all the benefits, so you are ready to use them when you need them.
This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult your financial advisor.
