If you have credit cards, you probably use them. But, most likely, you are not aware of all the benefits that they provide to you as a consumer.
Of course, you understand that these are convenient financial products that can be used for everyday purchases, but their benefits go much deeper.
We turned to experts to get a complete understanding of all the perks offered by credit cards. Keep reading to find out how your cards can help you do more than just pay quickly and easily.
1. Earn rewards and perks
According to Ted Rossman, industry analyst at CreditCards.com, the first thing that comes to mind about the benefits of credit cards is rewards.
“Whether it’s cash back or travel rewards, the best credit cards provide account holders with valuable added value,” says Rossman.
Rossman also noted that travel perks could include free airport lounge access, Global Entry and TSA PreCheck, free baggage check-in, priority boarding, car rental and mobile phone insurance, roadside assistance and additional delay reimbursement. or flight cancellations and lost or delayed baggage. .
Concierge services are another benefit of some credit cards, says Rossman.
“You can use a concierge service to help plan your trip, book a restaurant table, or book hard-to-find sports or theater tickets,” Rossman added.
In addition, some issuers offer welcome bonuses to new cardholders.
However, be aware that some options, such as secured credit cards, do not usually offer rewards or privileges.
2. Build your credit score
“Using credit cards responsibly and consistently is a good way to improve your credit score by charging for goods and services you can afford and then paying off your full statement balance for each billing period,” says Judith Corprew, Executive Vice President and director of compliance and risk management. Patriot bank employee
Your credit score benefits from your history of timely payments as well as having available credit that you are not using (which improves your credit utilization). These two factors make up 65 percent of your credit score.
It is important for your credit score that your credit usage is as low as possible.
But there are important considerations to keep in mind, Corprue warns.
Credit card interest can add up quickly if you don’t pay off your entire balance each billing period.
In addition, credit cards can often contribute to cost overruns, as many consumers do not feel like they are paying with “real” money as they would when using cash.
“If you have credit cards, it makes sense to use them regularly, even if only for small purchases, and always pay off the entire balance,” Korprue says.
3. Secure business funding
According to Brock Blake, founder and CEO of Lendio, one of the biggest misconceptions about credit cards is that they are not a good way to fund a startup.
Credit cards not only have benefits for personal use, but can also be useful when starting a business.
Businesses operating for three years or more can have many business financing options, Blake said, but startup loans can be a lot harder to come by.
This is where both personal and business credit cards come in handy – they may be your only viable option to start your business from scratch.
Not only can they help you finance the business of your dreams, Blake says, but they also come with many benefits.
For example, if you can qualify for a zero interest credit card, you can purchase much-needed business equipment and pay it off with no interest.
Just be aware that zero interest deals do have an expiration date – for consumer cards, they typically last between 12 and 15 months, although some issuers offer up to 21 months without interest. Many business cards offer 0% interest rates for 12 months.
Using credit cards to start your business can also help you manage your cash flow better, Blake says.
“This is one of the biggest challenges business owners face — they know they can increase sales and grow, but they need money to keep them going in the short term,” Blake says.
If you’re confident that your product fits the market and your ability to generate revenue, a credit card can help you get the inventory you need to get started, Blake says.
4. Get organized
Using credit cards allows you to keep track of your overall spending with a credit card account or online bill, which can help you set a budget and determine where you need to cut spending to save money throughout the year.
Some cards, like the Apple Credit Card, even have personal finance management tools that you can access on your smartphone or your online account.
Print your credit card statements and categorize purchases using different colored markers to see where you spent the most.
5. Enjoy the benefits you want
Another big benefit of credit cards is that you can choose the card that works best for you, says Mike Keenan, former head of US bank cards at TD Bank.
For example, if you often dine out, you might consider a card that will reward you with a higher amount at restaurants.
Or, if you commute or travel frequently, you may need a gas bonus card.
“Those with more than one credit card can prioritize using the respective card for different types of purchases to earn more rewards,” Kinane says.
6. Access to shopping and price protection
While policies may vary, most card issuers offer purchase protection, which allows cardholders to file claims for eligible damaged or stolen items for a limited time after the date of purchase, Kinane says.
According to Keenan, some card issuers offer refunds on purchases if the seller lowers the price of the item within the specified window.
“For example, if you buy a $500 TV and the price drops to $350 a week later, you may be eligible for a refund on the difference,” he says.
Be sure to check with your card issuer to find out what their price protection policy is, as many issuers have opted out of this coverage in recent years. For example, Citi, USAA and Barclays canceled their price protection incentives in 2019.
Credit card issuers may offer other types of benefits, such as travel insurance and mobile phone protection.
7. Make secure payments
Credit cards are safer because they are not linked to the funds in your bank account. All credit cards offer some form of fraud protection — meaning you’re not responsible if your card is stolen and someone charges big, said April Lewis-Parks, director of financial education at Consolidated Credit.
If you suspect your credit card has been stolen or you see suspicious payments on your credit report, your credit card issuer can easily cancel your card and correct the situation, and they can usually cover fraudulent payments.
The Fair Credit Billing Act (FCBA) protects customers when fraudulent transactions are made with a credit card account. In accordance with federal law, if unauthorized charges are made to a credit card, the maximum amount a customer can be held liable for is $50.
“As a preventive measure, you can also set up transaction alerts to help you detect fraud by notifying you when a certain amount is taken from your card,” Kinane says.
8. Simplify international travel
Dr. Sandi Webster, CEO and director of training at Sandi Webster LLC, says using a credit card while traveling abroad is much better than having a large amount of cash that could be lost or stolen.
However, if you want to use the card for shopping while traveling, make sure you select a card that does not charge foreign transaction fees.
“Sometimes you even have a break because it takes a few weeks for your card to process a payment, by which time the exchange rate may be in your favor,” says Webster.
9. Pay bills automatically
Forgot to pay bills? … Don’t worry, it happens – but it doesn’t have to. With automatic payments, you can rest easy knowing that all your accounts will be updated. With this perk, you can avoid late fees and keep your card active effortlessly.
Keeping your credit card active and then paying off the balance helps you improve your credit score because the length of your credit history contributes to your score.
Activating automatic payments does not mean that you should completely forget about monitoring your transactions and payments. Make sure you keep track of your accounts.
The key to enjoying all the benefits of a credit card is to make all monthly payments on time and pay off your balance in full when possible. This way, you can access the rewards and convenience that credit cards have to offer without the high interest rates and unnecessary fees. And a bonus – you can even get rewarded for the responsible use of your card.
Apple credit card information has been independently collected by CreditCards.com. The issuer did not provide details and is not responsible for their accuracy.