Four Hidden Credit Card Perks That You Might Not Know
Credit card perks are one of the common reasons that people made purchases with their cards. While you know how to get reward points, there could be many hidden benefits in your credit card that you do not know and you may be eligible for some of these hidden perks.
1. Car rental insurance
When renting a car, it is likely that the rental company tries to sell an insurance policy on the car. Many people allocate extra money to buy the insurance because they are concerned about having to pay for damages after an accident. However, if you have a credit card, you shouldn’t be worry about it. Many credit cards also offer car rental insurance each time you pay with your card. This might be an important source of savings if you often use car rental services.
2. Extended Warranty
Many card issuers also have extended warranty coverage on many different items you buy. If you do a lot of large purchases, for example electronics, this could be a great advantage, for example, when you buy a widescreen TV, many merchants try to offer an extended warranty. In most cases, this can be as high as several hundred dollars. However, if you buy the TV with your card, perhaps you already have an extended warranty included. Many credit cards offer an extended warranty that is larger in amount a normal warranty. This service is usually offered free of charge. Therefore, you can avoid spending extra money on extended warranty.
3. Purchase Protection
You can also enjoy protection on your purchases with your credit card. It means that if you buy something and you do not want it, you can return the item and cancel the transaction. This is true even if you’re dealing with a store that refuses to accept returned goods. You can simply call your bank and it won’t pay the merchant. It gives a lot of power when you go shopping, because you won’t be stuck with something that you don’t need.
4. Roadside Assistance
Another advantage that many people don’t realize they have with their current credit card is the roadside assistance. Many credit cards have free roadside assistance only for customers. If you drive on the highway and you have a flat tire or run out of gas, your credit card company may be able to ask someone to help you.
Credit Card Debts Accumulate Faster Than Savings Account Interests
Many people have at least two credit cards. Some people use their credit cards wisely, while others don’t. You may define responsible credit card usage as paying off debt balance every month and using less than half of the available total credit line. If you already own a savings account fund for retirements and emergencies then you are on the right track. However, if your credit card debt amount is equal to your savings account you’ll see that your credit card debts grow faster than your savings account, because typical credit card debts have higher interest than savings account. If this happens, you are facing a serious financial bleeding that will leave you wither and dry slowly. To fix things immediately, you need to start using your cards responsibly while building a respectable amount of savings account.
First you should get a credit card company that agrees to give you cash back on each purchase (cash rewards). Specifically, choose a card that will give you at least 3 percent cash back. It’s preferable not to open up another line of credit if you don’t have to do so.
Next, you’ll need to find a high-interest savings account. Companies like ETrade and INGDirect don’t use minimum balance requirements. Your credit union or local bank can also help you in getting an acceptable savings account rate, while, most online banks usually pay higher interest due to lower overhead expenses.
After you have your high-interest savings account and credit card with cash rewards opened, it’s time to use the credit wisely, don’t go beyond half of the credit limit and don’t put any purchases on the card at any given day that cannot be paid off immediately. Every month, you absolutely need to payoff the whole balance. Pay groceries and gas on your recently opened cash rewards card.
When the end of the month arrives, you will need to do the following:
- Pay all the credit card balance
- Cash out all available cash rewards – if possible transferred directly to your savings account
- Put unexpended money in the high interest savings account right away.
For example, if a credit card offer a 3% cash back and you spend $2000 in purchases every month, you may add $720 annually ($60 each month) to your savings account. That’s not a significant amount of money, but it’s surely better than nothing and requires almost no effort on your part.