Rounding it up
There are so many credit card options available, so it’s important to do your research and find the one with the best perks for you.
Many credit cards come with great perks such as cash back or points on purchases, protection plans.
As with any credit card, credit cards with perks come with a responsibility that you should only take on when you’re ready.
When used smartly, these perks can benefit you greatly and even save you money.
When it comes to credit cards, there are a lot of conflicting views out there. Some experts say you should stay far away from these tiny pieces of plastic, while others tout their benefits and tell you to sign up for as many cards as possible. So, who do you trust?
While it’s true that credit cards can have a hazardous impact on the financial health of the irresponsible, they can have an extremely positive impact on the financial health of those who know how to use them properly and how to take advantage of their perks. That’s right; credit cards have perks like cash back on purchases, points that can be used to pay for hotels and flights, and protection plans to insure your purchases, travel plans, or electronics.
These perks are the closest thing to free money out there. So, if you have the opportunity to get free money by using a credit card, wouldn’t you want to?
When you sign up for a credit card with perks that suit your lifestyle, your wallet can benefit big time. If you play your cards right, there are plenty of great benefits to holding a credit card (or two or three).
Common credit card perks
The right credit card can provide far more value than just an additional method of payment. When used well, it may even save you hundreds of dollars and headaches too. When researching what credit card to get, look for the following perks.
1. Cash back
One of the most common credit card perks and one of the best reasons to fund everyday purchases with a credit card is cash back. A cash back benefit allows you to earn back a portion of every purchase. The amount you can earn varies from card to card but is usually a few cents on every dollar, which may not seem like much but can add up quickly. Some of the best cash back cards offer 5% on every purchase, so if you spend 1000 dollars on your card in a given month, you will get 50 dollars back in your pocket, just like that.
If you pay your balance off in full each month, then using a cash back credit card can benefit you greatly.
Points are another popular benefit of credit cards. These cards offer a certain number of points on every purchase, which can then be redeemed in a variety of ways depending on the card. They can be used to purchase hotel rooms, flights, and rental cars, to shop at certain retailers, or to credit your account balance.
The amount of points you earn varies from card to card but is typically one point for every dollar spent; so 1000 dollars spent earns you 1000 points. Credit cards that give you points will typically offer bonus rates in certain spending categories as well; for example, 3 times the points on dining and 2 times the points on transportation.
Let’s see how this could benefit you
Say you spend 300 dollars on a flight to take a long-awaited weekend getaway, 200 dollars on the hotel room, 100 dollars on a nice dinner out, and 50 dollars on a new shirt for the occasion. If your credit card offers 2x points on travel, 3x points on dining, and 1x points on everything else, you will earn 1000 points on the flight and hotel purchases, 300 points on the dinner, and 50 points on the new shirt. That’s 1350 points, all for purchases you would have made anyway. When you accumulate enough points, you can redeem them and take your next weekend getaway without spending a dime, just points.
Points can be just as valuable as cash back if you can earn them and redeem them on categories you typically spend on. Once again, those categories will vary from card to card so be sure to research the options available to you and choose one that makes sense for your lifestyle. If you’re a small business owner, you may want to look for a card that provides bonus points for purchases made on shipping or internet services. If you’re a frequent flyer, search for a card that provides bonus points for purchases made with airlines.
Reimbursements for specific purchases
Cash back and points aren’t the only ways to earn free money when you use a credit card. Some credit cards will even reimburse you for specific purchases. For instance, this past year, many credit card issuers offered reimbursements up to a certain amount for grocery purchases. Other travel-specific cards often offer reimbursements up to a certain amount for travel purchases. Does it sound too good to be true? Credit cards that offer such enticing benefits often come with an annual fee and require an excellent credit score from applicants. If you qualify, and the reimbursement makes up for the annual fee, these credit cards could be an excellent choice.
"The right credit card can provide far more value than just an additional method of payment. When used well, it may even save you hundreds of dollars and headaches too."
If you don’t read your credit card agreement carefully, you, like many other people, may miss this perk. Most credit cards come with some form of protection plan, and the best credit cards come with multiple.
Protection plans can include Purchase Protection, where the credit card company will reimburse you for purchases you made that become damaged or stolen, Collision Protection, which provides accident coverage for rental cars, and cell phone insurance, which can cover the replacement cost of a damaged or stolen phone.
Keep in mind, protection is usually offered up to a certain dollar amount. While we hope you don’t incur any of these damages, having this perk on your credit card can protect you in these worst case scenarios.
...And many more
These are really just the tip of the iceberg when it comes to credit card perks, but they are the most common perks you’ll see when shopping for the right credit card for you. You might also uncover unique perks such as premier memberships with ride-share services, access to airport lounges, or free upgrades on flights.
Always read the complete benefits list of any card you are considering to determine which card offers the best perks for you.
Questions to ask yourself before signing up for a new credit card
There is a fine line between taking advantage of credit card perks and being taken advantage of. It’s easy to fall prey to the sweet deals on the marketing materials, but if you don’t read the fine print, you can get yourself into deep water and quickly.
Just because a credit card has perks, doesn’t mean you should sign up for it. Ask yourself the following questions before even considering signing up for another credit card:
1. Are you debt-free?
Before you even begin to salivate at the thought of all those sweet perks, you better be free from any other credit card debts or debts that are accumulating high amounts of interest. A credit card can be a slippery slope into debt, so you shouldn’t open a new one—even one with incredible perks—if you aren’t debt-free (not including a mortgage or other low-interest loan).
2. Do you have a healthy credit score?
Most of the best credit cards (those with the best perks) require an excellent credit score. And every application for a credit card is a hard inquiry into your credit history, which can put a temporary ding on your score. So, if you don’t have a healthy credit score, you shouldn’t consider applying for a new credit card. Before you apply for any credit card, be sure to check what type of credit is required, which a lot of credit card comparison sites supply.
Given that a history of on-time payments is one of the biggest influences on credit score, a healthy credit score is one indication that you manage your money well. Good money management is crucial to owning a credit card, which brings us to our next question...
3. Can you manage another credit card?
Every credit card you sign up for is another account you need to stay on top of. If you already have a credit card or multiple and you can’t comfortably make payments on it each month on time, then you’re not ready to manage another card—period.
4. Is the annual fee more than offset by the benefits of the card?
As we briefly touched on above, some of the credit cards that offer the best perks come with an annual fee or a price you pay to hold the credit card each year. Always weigh the pros (the perks) with the cons (the annual fee) to see if the pros outweigh what you will spend to hold the card. Annual fees vary from card to card so always compare annual fees when researching credit cards as well.
5. Will you actually use the credit card perks?
Credit card companies issue new bonus offers and new perks all of the time to continue to entice customers to sign up for a new card. Some of these bonuses will seem too good to be true, but don’t sign up for a card simply because it’s offering great perks. Those perks have to be relevant to your lifestyle. For example, if you always stay in rental properties when you travel, you shouldn’t open up a credit card with a hotel chain. Similarly, if opening a credit card at a retailer gives you 20% off your first purchase, but you rarely shop at that retailer, you shouldn’t sign up for the credit card.
When you choose a credit card with perks that are in line with your lifestyle, you will be much better off.
Hopefully, you now know there’s more benefit to having a credit card than the ability to delay payments. If your credit allows, you shouldn’t sign up for just any credit card, but do your research and select a card with perks, and perks that you find personally attractive. If you will be making purchases anyway, why not be rewarded for them by making purchases with a card that will give you points or cash back? Heck, you could even be reimbursed for some purchases completely. Don’t leave that free money on the table!
If you don’t have a healthy credit score or a good track record of managing your money, credit card perks like these should motivate you to improve your credit score so you can take advantage of the credit card benefits available to the fiscally fit in the future.
Ally Streelman is a storyteller whose work spans money, wellness, travel, and more with the chief goal of empowering readers. When she’s not stringing together sentences, you can find her immersed in a new city, cookbook, or novel or encouraging women to take hold of their financial journey.