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Credit card bonuses are nice
Cashback bonus & miles no good if you don’t pay
There are some nice perks to having major credit cards. But those perks are worthless if you let poor money management skills take over and leave you in debt. Take advantage of the perks by using your cards wisely.
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Credit cards - Use them wisely and they can provide valuable extras
The credit card industry is quite competitive. You might have figured this out already if, like many people, you find offers for credit cards in your mailbox just about every day. It’s a multibillion dollar business, and the companies that issue the cards would love to have you as a customer. In fact, many of them are so eager to have you as a customer that they will often provide extra services to you just for taking their card. That’s great, and it’s always nice to get something for free, but remember that they are counting on you being irresponsible and paying them more than the perks are worth.
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Here are some tips about what your credit cards can do for you and how you can stay out of trouble:
- Cashback bonus - The Discover card and a few others offer cash back bonuses each year. You get a portion of what you charged on the card back in cash. That’s great; you can save more by using such a card instead of another one that doesn’t give you cash back. On the other hand, the bonuses only average about 1% at the most, and if you don’t pay your bill in full each month then you’re losing your bonus to interest. Take advantage of free cash - pay the bill in full each month.
- Airline miles - With fuel costs rising and the airlines offering fewer and fewer discounts, a credit card that offers bonus miles for using it is a great idea, particularly if you travel a lot. You usually get one mile for each dollar spent, and sometimes there are bonuses for buying certain things or for buying from certain retailers. Be sure to read the fine print, though. The miles sometimes expire and there are often annual fees with such cards. The last thing you want to do is pay $10,000 in order to get a $300 plane ticket. And like with the cash back option above, most of your benefits go away if you carry a balance and add interest into the equation.
- Purchase protection - American Express, and others, offer a protection plan for merchandise purchased with the card. It’s an extra benefit that can cover certain circumstances regarding damage or possibly even theft. If you buy a lot of merchandise, you may get some benefit from a card that offers additional purchase protection.
- Rental car insurance - Many cards will offer additional insurance if you use the card to pay for a rental car. Read the fine print carefully and if you are in doubt, contact your card company for details before you travel. That way you will know for sure if you are protected.
There are many benefits to having credit cards, and the competition in the industry makes it worth your while to shop around for the card with the best perks. Just remember that the perks aren’t free and that the companies are expecting you to pay for them by carrying a balance and paying high interest. Don’t fall for it. Pay your bills in full when you can. And enjoy the perks.
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