Credit cards can come with significant benefits, many of which are commonly overlooked. As significant value can be derived from credit card benefits, it’s important to understand the benefits both of currently owned credit cards and potential new and better credit cards. Having the best credit card for personal use and taking advantage of everything it offers can add substantial value over time. Obviously, one of the most focused-on benefits is the reward program that is advertised with a card, but that is not everything that you get when you use a credit card to its full potential.

Purchases

Some credit cards protect your purchases and provide options if anything should go wrong with a purchase, or if the price of your purchase is reduced in the near-term future. Here is a list of some of the different types of purchase protections that credit cards can have.

• Price Protection — This benefit allows you to buy something and get a partial refund if the item goes on sale during a set period of time. This generally requires that you register the purchase with the credit card on the credit card’s website and then petition the credit card company to refund the difference in price. Obviously, you would not want to do this for every small purchase, but for some large purchases, especially those purchases that have a history of price volatility, it may very well be worth your while to put them under the price watch for your credit card and to check during the time price protection is available on that item to see if the price decreases.
• Purchase Protection Insurance — This benefit covers you in the case of theft or damage of a newly-purchased item within a given period of time. This can be used strategically. For example, this coverage could be used if you intend to purchase a new phone and have a trip coming up in an area of the world that is prone to pickpocketing and theft. You can coordinate the purchase of a new phone with the Theft Protection coverage on your credit card so that you don’t have to take an old phone or worry about your new phone being stolen while you are on vacation.
• Extended Warranty Protection — This benefit extends the manufacturer warranty on purchases for a certain amount of time. This may mean the offer to purchase an extended warranty may be of much lower value than it would have been otherwise, had you not had the coverage from your credit card. Obviously, you need to know the details of how this type of coverage works before making any warranty decision for any large purchases. It is always worth checking on any potential insurance coverage from your credit card before you purchase an extended warranty or a replacement product at your own expense, as you may have a warranty that you did not know you had through your credit card company.
• Some credit cards will even refund the amount of a purchase if the store where the purchase was made will not accept a return.

Travel Benefits

One of the areas in which credit cards can add a significant benefit is travel. Below are a few of the benefits the travel cards have that may be of use to you, but that you may not know about.

• Travel Insurance — This insurance can include medical and dental coverage within certain limits if you’re traveling outside of a certain radius of your home.
• Car Rental Insurance — It is important to know whether the insurance provided by the card is primary or secondary insurance. Primary insurance means the card’s insurance covers the incident up to the benefit amount without factoring in any existing auto insurance coverage you may have. Secondary insurance requires that your personal auto insurance policy pay any claim up to your personal auto insurance limit first, then the secondary insurance will cover the remainder up to the secondary insurance limit amount.
• Access to Airplane Lounges — This can be access to a particular network or provider of lounges and will often include free showers, food, drinks, WIFI, and a quieter place in the airport to relax and wait for your flight. The airline-specific lounges may also be able to help you with any ticket changes without the need to wait in the normal check-in lines in the case of a canceled or delayed flight. This may also allow the card holder to bring a certain number of guests into the lounge for free or for an added charge.
• Trip Cancellation Insurance — This insurance will give you a refund for any eligible non-refundable trip expenses if certain emergencies arise that mandate a trip cancellation.
• Trip Interruption Insurance — This provides a stipend if your trip is delayed by a certain amount of time. For instance, the card may give a certain dollar amount credit per person on the trip if your flight is delayed by more than four or five hours. This credit can generally be used for lodging or dining.
• Baggage Delay Insurance — This insurance provides a stipend if your baggage from a flight is delayed for a certain amount of time so that you have money to replace essential items while you wait for your bags to be delivered to your hotel or home.
• Lost Luggage Reimbursement — This is similar to baggage delay insurance as it provides you with a certain amount of money if your bags are lost and never recovered. This is intended to allow you to replace the items in your baggage up to a certain dollar limit.
• No Foreign Transaction Fees — This can be meaningful as some credit cards charge 1 to 3% in foreign transaction fees on any purchase paid for in a foreign currency; often, paying for things in U.S. dollars while in foreign countries comes with hidden expenses.
• Credit for Global Entry or TSA Pre-Check Fee — This may be provided to cover the cost for the owner of the card to get Global Entry or TSA Pre-Check, both of which help in getting through airport lines much more quickly.
• Accidental Death and Dismemberment Insurance — This provides for a certain amount of insurance if an accidental death or serious injury should occur while you are in transit paid for with the credit card. This amount can range from around $100,000 to $1,000,000 per person.
• Emergency Evacuation and Transportation Insurance — This is used to help you leave a country you are visiting if there is a medical emergency, and may provide help ranging from special flight accommodations to being escorted by a doctor so that you can get medical care in your home country.
• Special Arrangement with Travel Providers — This can include priority boarding, free checked bags on flights, frequent customer or preferred customer status with a travel company, free upgrades if available, free nights at hotels if you booked for a certain number of nights, free Internet access, resort credits, or free breakfast.

 

Other Benefits

Many credit cards come with a concierge service. Generally speaking, the low quality of help provided never ceases to amaze me regarding these services. That’s not to say that value cannot be derived by using these services, but the value varies greatly depending upon the request and the individual working for the concierge service assisting you. The best uses of these services, in my experience, tend to be along the lines of a very basic task-oriented personal assistant. It is unusual to be able to get any reservations or tickets from these services that you would not be able to get on your own. It can be very useful to call the service before leaving for vacation and ask for a city guide for the city that you are visiting to include things along the lines of best restaurants, entertainment, things to see, any special events happening in town while you are there, best hotels in town, or a list of available tours. The service can also be used to coordinate with companies in other countries that only have an international phone number so that you do not have to make an international call in order to do business with the company in the other country, for instance, buying a product or making a restaurant reservation.

Some credit cards arrange for special access or discounts on tickets for sporting, music, or entertainment events.

It has become more common for credit cards to provide you with access to your credit score so that you can monitor it for free on a regular basis.

Roadside assistance is a benefit that is often overlooked by those with credit cards that have the coverage and may be paying for roadside assistance unnecessarily.

Some of the higher-end credit cards also provide annual credits. These can be for any travel-related expenses, a particular named airline and the associated fees, or for some specific service such as Uber. These credits, if available, generally amount to hundreds of dollars per year. The way that these credits are given may also lead to some opportunities. Often, the credits are given on a calendar-year basis. This means that each January the credit resets. Membership fees, however, are usually charged on a membership-year basis, in other words, twelve months from the date you sign up for the card. This means you may be able to sign up for a credit card in June so the first year’s fee covers the timespan between June and December, get a new credit in January and use the new credit before June, then cancel the card having only paid for one year’s worth of membership but receiving two years’ worth of credits.

Special Considerations

Credit card fees can range from nothing to hundreds, or even thousands, of dollars per year. These fees may be worth paying if the benefits are substantial enough to justify the cost and in fact, you may end up making a profit from owning a high-fee card if the card is a good choice for you and the way you use credit and the benefits involved. The signup bonus provided by the card may good be enough to justify the first few years of fees, regardless of any other benefits.

Credit Card Rewards

Credit card rewards and redemptions are a benefit that can add some of the highest value if used strategically. Often, it seems that credit card rewards schemes are built to be intentionally misleading or confusing which can cause people to get a far smaller return than that which is possible. This section could go very in-depth and certainly the more time someone spends understanding these rewards, the more they are able to get a good or very good return from the rewards that they have earned. The purpose of this section is not to teach you how to maximize rewards, as that is a constantly-changing field, but to help you at least get an acceptable level of return from the rewards you are earning. For our purposes, a 2% return is what should be expected as a minimum from your credit card purchases. The reason for this is that there are cards available that provide you with 2% cash back in every category with no yearly fees.

If you are not getting at least 2% back from your purchases, a cash back card may be the best card for you on a day-to-day spending basis. As a general rule, it is less beneficial to use rewards for products, cash back, or cheap airline tickets. An easy way to tell if you are getting at least 2% back is to look at the price of the airline ticket or other benefit you would be redeeming and compare it to the number of miles or points you must redeem to get the same ticket. Here is an example: let’s say you earn 1 point per dollar spent. The ticket you want to book is either $300 or 30,000 points. We would calculate your percentage return by dividing the $300 cost of the ticket by 30,000 points, which gives us 1%. Because you were only earning 1 point per dollar spent, you would multiply the 1 point per dollar spent by the 1% and get a final return on your reward of 1%. In this case, you would have earned twice as much money just by having cash back reward card that gave you 2% cash back and you would be able to book any airline ticket or other benefit you wanted with the money earned from the cash back. In the case of an airline ticket, you would also have the benefit of earning frequent flyer miles on the airline for the miles flown during the flight.

It is not uncommon for me to see people receiving less than half of a percent back from their rewards. Keep in mind, there are some cards that will pay you multiple points for every dollar spent in certain categories. This means that if you earn 3 points per dollar spent in the situation mentioned above, you would multiply the 1% redemption by the 3 points per dollar spent to give you a 3% return. Returns can significantly exceed 2 or 3% if you are willing to spend the time to maximize them, but it will take some time and research in order to be able to learn to do so. The reason to perform the calculation is to know what you are actually getting in rewards so that you know if you should switch to a cash back card, that will not provide the most optimal rewards, but will provide ease of use and at least the minimum amount of rewards back, or if you should choose to learn more about rewards and how to maximize them.

One last point to mention on rewards is the Rewards Network. This is a service that is at the center of many airlines’ dining programs and Upromise college cash back. You can add any credit card to one of these services online, and if you dine at one of the participating restaurants, you earn either additional airline rewards or cash back for college savings automatically. These services are free and only require a one-time sign-up on the program’s website, though you can only choose one of the programs for each card. You might be surprised at how often you dine at one of the participating restaurants and earn miles or dollars just for going through a one-time sign up.

The intent of this article is not to encourage the use of a particular card or type of card, but to make you aware of some of the lesser-known benefits of using a credit card. That being said, there are a few cards that are among my favorites, which include Fidelity Rewards Visa Signature, Citibank Double Cash, Citibank Prestige, Chase Sapphire Reserve, and American Express Platinum. If you fly often on the same airline and have checked luggage, it may also be worthwhile to have that airline’s credit card so that you can check bags for free and receive priority boarding. The yearly cost of the card may be more than made up for by the amount of money that would have otherwise been spent on checked baggage.