Many credit cards offer valuable benefits, and although they can be appealing, that doesn’t mean you’ll actually use them. Before you choose a card based on its benefits, consider whether you can maximize the value of its perks.
Common High-Value Credit Card Benefits
Not all credit cards have extensive benefits, but some can save you money, time and hassle.
Shopping protection. Merchant-sponsored purchase coverage and policies can, at times, be limited. Using your credit card for in-store and online purchases affords you extra shopping safeguards when these benefits are available.
- Return protection. If you’ve passed a merchant’s return policy deadline but made a purchase using your credit card, you might still be able to get a refund through your card issuer if you have this coverage.
- Price protection. Price protection coverage allows you to get reimbursement for a price difference on an eligible purchase made on your card if the price drops.
- Purchase protection. In the event your purchased item is lost or stolen, purchase protection can help you recoup the value of the loss.
- Extended warranty. Credit card extended warranty coverage prolongs the manufacturer’s warranty on an eligible item, sometimes for an additional year.
- Cellphone damage protection. If you damage or lose your phone, cellphone protection through your credit card helps cover the cost of repair or replacement.
Travel benefits. Today’s top credit card benefits offer huge appeal when it comes to travel perks. Benefits may include:
- Trip cancellation and interruption insurance. Travel insurance can refund the cost of a canceled or interrupted trip if you used your credit card to book that particular travel arrangement.
- TSA Precheck or Global Entry fee reimbursement. When you enroll in TSA Precheck or Global Entry, you’ll receive a statement credit for the cost of enrollment.
- Airport lounge access. Gain exclusive access to airport lounges where you can relax, work and get free food and drinks before your flight.
- Priority boarding and free checked bags. Co-branded airline cards may waive checked bag fees and allow you to board the plane earlier than other passengers.
- Car rental damage coverage. Car rental coverage insures you for car rental damage or loss while you’re on your trip.
- Travel credit. Some credit cards offer an annual statement credit for use toward transportation, flights, hotels, checked baggage and more.
- Special credits. A few credit cards offer unique benefits, like credits toward specific purchases. For example, the Platinum Card from American Express offers a $200 annual Uber credit.
Of course, in addition to the benefits mentioned above, credit card networks generally provide zero-liability protection in the event of fraudulent activity.
4 Questions to Ask About Cardholder Benefits
Although the dollar value of these benefits – as well as the peace of mind they lend – can be considerable, they might not be worth it for everyone. Before opening a credit card account, ask yourself the following questions:
How often will you actually use card perks? When evaluating a prospective credit card, be realistic about whether you’ll really use a particular benefit.
“As an example, it doesn’t make good financial sense to pick a card just for their airport lounge privileges if you rarely fly,” says Robert Farrington, founder and CEO of The College Investor.
Be sure to check out the details, too. Even if you fly regularly, the lounge network offered by your credit card may not necessarily have a lounge in airports you typically visit.
Whom do you travel with? As the primary cardholder, all of your card’s benefits cover you, but they don’t always extend to your travel party. For example, if you regularly travel with a handful of friends, consider that the number of complimentary guests you’re allowed to bring into an airport lounge offered through your card is typically limited.
Also, when it comes to a travel perk like TSA Precheck, only an accompanying child 12 or younger can join you in the Precheck lanes. Other travel companions older than 12 must use standard TSA lanes. If you’re traveling as a family, you’d have to pay for an application for your spouse and older children if you want to all go through the same TSA Precheck lanes.
Think about whom you’re likely to travel with and whether your credit card’s travel benefits will be a convenience or just make travel more complicated.
How loyal are you? Depending on the card you’re considering, you might be tied down to specific companies when it comes to travel benefits. This could be challenging if you aren’t already a loyal customer of that brand or merchant.
“Opening a new credit card for deals with specific airlines or niche hotels might feel like a good idea when you have that one travel trip planned, but will you be using these companies regularly in the future?” says Jared Weitz, CEO of United Capital Source. It might not be worth it to open an airline card if you’re only going to use it for free checked bags on one trip.
What is this benefit really costing me? The greatest risk of chasing glamorous credit card benefits is falling into debt. Earning access to premium credit card benefits usually comes at a cost. A card with the benefits you want could require an annual fee. And generally the value of available benefits isn’t worth paying interest over.
If you can’t pay your credit card in full each month, you’ll be charged interest on your balance and may end up with unmanageable debt.
“Not only will this wreak havoc on your financial situation, but it will also negate the value of the benefits,” warns Leslie Tayne, a debt resolution attorney and author of “Life & Debt.”
How to Calculate if a Card’s Benefits Are Worth it
“You need to crunch the numbers,” says Farrington.
Compare credit card benefits you would have paid for if they weren’t free with the cost of maintaining a credit card that makes them complimentary.
For example, if you’d pay $10 to $30 for a car rental company’s collision damage waiver, a credit card with no annual fee that offers a free waiver is a good deal. But if the card has a $95 annual fee and you don’t spend that much on car rental insurance each year, that particular feature isn’t worth it. Of course, you could make up the value with additional features, assuming you’ll use them.
With a slew of sign-up promotions, rewards programs and benefits available with credit cards, it’s easy to get distracted from your bottom line. Evaluate your likelihood of using a card’s benefits so you land on a card that’s the right fit for your lifestyle.