Credit cards come with additional perks, perfect for saving money in addition to taking advantage of low-interest rates and rewards. However, most people don’t know these perks exist, even though they are designed for getting the most out of a credit card. The right credit card can save you $100's and even $1000's of dollars a year.
While it might seem strange to purchase common items like groceries or gas with a credit card, there are a number of rewards and consumer protection services associated with credit cards that you may not know about. Take a look at these 5 reasons to use a credit card for everyday purchases to learn why a credit card might actually be the most thrifty and secure method of payment available.
Cash Back and other Rewards
There are several credit cards designed specifically to reward you for using your card on common purchases like gas or spending at restaurants. In these instances, your financial institution will credit your account with points that can be redeemed either for a predetermined cash value or a specific item. Often times the points will be worth more when used towards a specific item rather than in exchange for cash, so you may want to look into how your rewards points would convert with a credit card that you are interested in. Regardless of whether you choose to redeem your points for cash or concert tickets, a credit card can be a great way to get more from the money you are already spending every day.
Return Protection
Have you ever purchased a jacket or pair of pants that looked great in the store, but even after a few weeks in your closet, it still had the price tag on it? And when you tried to return your brand new item, the store was unwilling to let you return it for a refund? This all too common frustration is something you might have been able to avoid if you had made the purchase with your credit card. If the store refuses to give you a refund and you have a credit card with Return Protection, you can simply contact your card’s customer service team and get a refund through them. This service isn’t available with every card, so you may want to check before signing up for a new card or making an expensive purchase on your current card. Additionally, there are time limitations on this protection services and most cards will allow you to return items through them for a refund within 60 - 90 days. If you like the item you purchased, but just saw it on sale for less than you paid, you might want to check out the next reason on our list.
Price Protection
Lot’s of stores will offer to “beat any price” on an item you may find at a competing retailer. But in order to claim your discount you’ll need to go in, find a manager, provide proof of the exact same item offered at a lower price, and then wait in that long customer service line for someone to finally refund you the difference. Or, you could just use a credit card with price protection. Credit cards like Citi Group’s “Citi Card” offer to automatically refund you the difference on any purchase under $500 when you show them the item on sale. So let’s say you impulse buy a beautiful new pair of shoes at the mall, but then see the same shoes for $100 less on Amazon.com. Rather than go back to the store for your refund, just contact your cards customer service team and share the shoe’s listing on amazon with them. You’ll then receive the difference credited back to your account.
Extended Warranty
When it comes to returning items and receiving refunds for items on sale, a credit card has you covered, but did you know that you can also use your credit card to extend the protection on your purchase. If your purchase comes with a warranty, many credit cards will offer to match the original manufacturer’s warranty and extend it up to a year. Since many items tend to fail shortly after the manufacturer’s warranty expires, the extended warranty offered by a credit card could potentially save you hundreds. There are several limitations on warranty duration and total value of the item, so be sure to look closely at the conditions of this benefit before purchasing a new item with your current card or signing up for a new card.
Fraud Protection
A popular technique among identity thieves is called “skimming” which works by pulling information from your debit or credit card and using it to hack into your accounts. The equipment used to skim your card information is often designed to look exactly like an authentic card reader at a retail store or ATM. Once your card goes through the skimmer, your account is now vulnerable to fraud and theft. Financial institutions and retail stores are working diligently to prevent this from ever happening, but it’s not always possible to catch every skimmer. Rather than risk exposing your checking account to fraud by using your debit card for everyday purchases, you might consider switching to a credit card instead. By using a credit card rather than a checking account, you can prevent an identity thief from gaining access to the funds in your checking or savings account, which may well exceed your credit cards limit. And, if your credit card information does get stolen, you can quickly freeze your card, and contact the credit card’s security department to have any fraudulent charges reversed.
If all these perks sound a little too good to be true, and you’re wondering how credit card companies can afford to offer so many benefits, the answer is actually pretty simple: Interest. Credit Card companies can afford to offer these amazing benefits because most people do not pay off their balance each month and they are charged interest on the money they owe. Some cards offer exceptional benefits, but also charge exceptionally high interest rates, so you’ll need to be careful to avoid exorbitant interest rates when considering a new card. But even if you do find a great credit card with lots of benefits and reasonable interest rates, you’ll still need to be diligent about paying off your balance every month if you want to take full advantage of a credit card for everyday purchases.
References
1. https://www.americanexpress.com/us/credit-cards/features-benefits/policies/extended-warranty-terms.html
2. https://creditcards.chase.com/a1/sapphire/compare?CELL=6H8X&AFFID=SWlnSnn6x54-bmKGWx1GeUAZr7sr74aM6A&pvid=9ce27f879d0347b69e1df5b7d8b0c801&jp_cmp=cc/596284/aff/15-31363/na
3. https://www.citipricerewind.com/guide
4. https://www.americanexpress.com/us/credit-cards/features-benefits/policies/return-protection/faq.html
5. https://www.nerdwallet.com/blog/credit-cards/protect-against-credit-card-fraud/
