I hear a lot of talk, and read a lot of articles, about the evil of credit cards. Personally, I think it’s quite the opposite. There’s no downfall to having a credit card. They build your credit score due to their revolving nature of credit, they offer a ton of consumer protection, and the rewards are more than just icing on the cake. The problem always lies within the credit card holder. People simply can’t control themselves. Food can be bad if overeat, but you never hear people saying you need to go through life without eating. Credit cards are the same. If you use them properly then they are ALL benefit and zero downside. But I am not going to bother getting into the credit card rewards story, most of you get the offers in the mail all the time. Today I am going to focus on the benefits of having a credit card that you probably didn’t know, or at the very least, don’t take advantage of.
The absolute most important and powerful advantage of paying with a credit card is the ability to dispute a charge! I’ve talk about it before, but really want to drive this point home. There are times when companies have offered me a small discount if I paid with cash and I opted to pay with a credit card anyways. When you give someone cash there is very little you can do to get the money back if you are dissatisfied. At that point, you either need to beg and plead for a refund, or take them to court! Neither of which is fun to do, nor do they typically provide a desirable result. However, if you placed the charge on a credit card then you can simply logon to your account and place a dispute via an online form…the whole process usually takes me about 2 to 3 minutes. I would say that I place somewhere between 3 to 5 disputes a year. I’m actually not a picky customer, I just tend to receive very bad service. I’ve had movers destroy my furniture, travel agents overcharge and underperform, and even unscrupulous charges from various other merchants and retailers that never even happened! When I was young and naïve I used to call and work with them. That almost never worked, and almost always wasted my time. My success rate for credit card disputes is currently sitting at 100%! Keep that stat in mind next time you are thinking about paying with cash instead of credit.
If you are a concert goer then there are some definite entertainment perks to be had with certain credit cards. Most Chase and Citibank credit cards have online presales to certain concerts and events for their cardholders. You will usually get some flashy emails about being VIP, but unless you are a coveted Platinum card holder (typically by invite only) you probably aren’t going to be sitting backstage with the band. However, these presales have allowed to me purchase crappy seats before they sold out to the general public. The seats might have been crappy, but they were better than no seats at all! It also saved me from having to buy the same crappy seats from a ticket broker at an inflated price later on.
Here’s what Best Buy, Costco, and Amazon don’t want you to know… most credit cards offer extended warranties…FOR FREE. You know how Best Buy likes to charge you the equivalent price of the product for a 1 year warranty? Well, all American Express cards offer a free 1-year warranty, above and beyond the manufacturer’s warranty, on any item you purchase with said card. That’s right, an absolutely free extended warranty. Those items are actually the highest mark-up Best Buy has, it’s ALL profit for them. Also, you don’t have pesky deductibles to pay for cashing in on these warranties, unlike most other merchant warranties. I bet if I asked 10 random people the last time they utilized this little known benefit I would be hard pressed to find one person who could answer.
Price protection is another huge benefit. Not every card offers this advantage, though most Visa’s do. It’s sort of like the “best price” or “price match” guarantee that a lot of retailers are offering to customers these days. If you buy an item at one price, only to turn around a week later and find it on sale, you are able to recoup the difference in expenses. While this takes a bit of time on your part and involves saving store receipts, it’s actually much easier than having to go through the paperwork nightmare at the retailer itself. You typically have a 60 day window to watch for any price changes, but that is often 30 to 45 days longer than retailers generally allow. Also, you have a coverage limit that usually has a ceiling of $1,000…but all cards are different, so make sure you read the fine print. I do know that there are some apps out there now that actually store your credit card purchases and then work in the background with retailers and credit card companies in order to refund you your money. They typically keep 25% of the amount they get back for you, but that’s usually 25% of something you didn’t have to begin with.
To me, the amount of travel protection and insurance provided by a credit card is probably second only the power of disputing a charge. If you look up online how much money rental car companies make via their rip-off insurance they sell to every customer, it will baffle you. Even if you aren’t one of the people who buys that crappy insurance I am willing to bet you know someone who does. If you get into a fender bender with a rental car, your fault or not, there is a good chance you automatically have coverage through your credit card. Just remember, in order to be covered you have to pay with that specific credit card. Have you ever been the victim of lost or misplaced luggage? Some airlines that lose your luggage will step up their game and offer you adequate compensation to satisfy the customer, but they aren’t obligated to do so. They only have to reimburse you $25 each day your baggage is missing, which is peanuts and can put a damper on any vacation. Now if you have a credit card with luggage protection then chances are you will be able to make up the different between the airline reimbursement and the value of your belongings by taking advantage of it. Last, but certainly not least, is your trip cancellation insurance. I was actually dumb and bought travel insurance a few years ago for my honeymoon. I had just recovered from a bad illness and knew that it could flare up again at any point. If it happened to flare up right before the trip then we would be out the money. I probably spent on trip insurance the equivalent of every excursion we did on our honeymoon, it wasn’t cheap. I now know that one of my three credit cards allows me to cancel any trip, hotel, or cruise I book for reasons beyond my control. That could include inclement weather, family emergency, or personal health reasons. So basically I wasted several hundred dollars that the travel agent pocketed a good portion of.