Every time you go shopping, you have to make a choice about how to pay, as the typical store will accept cash, debit cards, credit cards, and perhaps checks. Each of these methods of payment have their advantages and drawbacks, but few credit card users truly appreciate all of the valuable benefits that are offered by the best credit cards.
Here are five benefits that shoppers can expect when they choose to pay with their credit cards:
1. Earning Rewards
One of the most valuable benefits that credit cards offer shoppers is the opportunity to earn rewards for spending in the form of points, miles or cash back. Competitive rates of cash back ranges from 1-2% on all purchases, to as much as 6% cash back from types of merchants that are eligible for bonuses. For example, to earn a high level of cash back on all purchases, you can use the Citi Double Cash card, which offers 1% cash back on everything at the time purchase and another 1% when the purchases are paid for, for a total of up to 2% cash back on everything. There is no annual fee for this card.
To earn bonus cash back, you can use American Express Blue Cash Preferred, which offers 6% cash back on up to $6,000 spent each calendar year at U.S. grocery stores, 3% cash back at U.S. gas stations and at select U.S. department stores, and 1% cash back elsewhere. There is a $75 annual fee for this card.
2. Purchase Protection Policies
Many credit cards come with policies that will protect what you buy from theft or damage within a limited time after purchase. For example, the Chase Freedom is a popular cash back rewards card that offers a purchase protection policy that covers your purchases for 120 days against damage or theft, for up to $500 per claim.
3. Extended Warranty Coverage
Don't you hate it when something breaks just after its manufacturer's warranty expires? But when you use one of the many credit cards that offers an extended warranty policy, eligible purchases will be covered for an additional year beyond the manufacturer's warranty.
4. Price Protection
Another problem that shoppers dread is when the items they've purchased go on sale for a lower price shortly afterwards. But if your credit card has a price protection policy, you can receive a refund of the difference. For example, Citi cards such as the ThankYou Preferred offer their Price Rewind policy which will automatically refund the difference if a covered item is found for less within 60 days of purchase. All you have to do is register your purchases, and Citi will search for a lower price.
5. Chargeback Protection
When you pay with cash, checks or debit cards, you have little recourse if you never receive what you paid for or if the goods or services you receive were not as described. But when you use a credit card, you are protected by the Fair Credit Billing Act of 1974 which requires card issuers to refund your money if you don't get what you paid for. In contrast, you would have to go to court if the merchant refuses to do the right thing if you used another method of payment.
Overcoming the Drawbacks
Credit cards do have their drawbacks, but they can be overcome. First, credit cards will impose high interest rates when you carry a balance. But the solution is to avoid interest charges by paying all of your monthly statement balances in full and on-time. Doing so turns your card into just another method of payment, not a means of financing. If you do carry a balance on your credit cards, then you should forgo rewards and look for a card that offers the lowest possible interest rate.
By leveraging the advantages of your credit cards and minimizing their drawbacks, you will find that they are the most effective method of payment available.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.