You probably know it’s quick and easy to use your credit card. But you might not know the other benefits you’re getting, including rewards, perks, fraud protection, credit building and more. Read on to learn more about the key advantages of using credit cards.
If you own credit cards, you likely use them. But chances are, you aren’t aware of all the benefits they provide you as a consumer.
Sure, you realize they’re convenient financial products you can use for everyday purchases, but their advantages go deeper than that.
We turned to the experts to get a complete picture of all the perks credit cards offer. Keep reading to find out how your cards can help you do more than just pay quickly and easily.
1. Earn rewards and perks
For Ted Rossman, industry analyst at CreditCards.com, the first thing that comes to mind about credit card benefits is the rewards.
“Whether they’re cash back or travel rewards, the best credit cards give account holders valuable fringe benefits,” Rossman says.
Rossman also noted that travel perks can include free airport lounge access, Global Entry and TSA PreCheck, free checked bags, priority boarding, rental car and cellphone insurance, roadside assistance and reimbursement for extra expenses due to delayed or canceled flights and lost or delayed luggage.
Concierge service is another benefit that comes with some credit cards, Rossman says.
“You could use concierge service to help plan a trip or secure a coveted restaurant reservation or hard-to-find sports or theater tickets,” Rossman added.
In addition, some issuers offer introductory bonuses to new cardholders.
However, keep in mind that some options, such as secured credit cards, typically don’t offer rewards or perks.
2. Build your credit score
“Using credit cards responsibly and consistently is a good way to build your credit score by charging goods and services that you can afford, then paying off the full statement balance every billing period,” says Judith Corprew, executive vice president and chief compliance and risk officer at Patriot Bank.
Your credit score benefits from your record of on-time payments, as well as having available credit that you aren’t using (which improves your credit utilization). These two factors make up 65 percent of your credit score.
It’s important for your credit score to keep your credit utilization as low as possible.
But there are important considerations to keep in mind, Corprew warns.
Credit card interest can build up quickly if you don’t pay off the entire balance every billing period.
In addition, credit cards can often encourage overspending because, for many consumers, it doesn’t feel like they’re paying with “real” money, like when they use cash.
“If you have credit cards, it makes sense to use them regularly, even if only for minor purchases, and always pay off the full balance,” Corprew says.
3. Procure business funding
According to Brock Blake, founder and CEO of Lendio, one of the biggest misconceptions about credit cards is that they’re not a good way to fund a startup.
Credit cards not only have perks for personal use, but they can also be instrumental in starting a business.
Businesses in operation for three or more years may have many options for business financing, but startup business loans can be a lot harder to find, Blake says.
This is where both personal and business credit cards come in — they might be your only real option to get your business off the ground.
And not only can they help you fund the business of your dreams, Blake says, they also come with many perks.
For example, if you can qualify for a 0 percent interest credit card, you could purchase a much-needed piece of business equipment and pay it off, interest-free.
Just keep in mind that 0 percent interest deals have a shelf date — for consumer cards, they typically expire in 12 to 15 months, although some issuers offer up to 21 months of no interest. Many business cards offer 0 percent interest periods of 12 months.
Using credit cards to start your business can also enable you to better manage your cash flow, Blake says.
“This is one of the biggest struggles that business owners face — they know they’ll be able to generate sales and grow, but they need money to sustain them in the short term,” Blake says.
If you’re confident in your product-market fit and your ability to generate revenue, a credit card can help you purchase the necessary inventory to get things rolling, Blake says.
4. Stay organized
Using credit cards allows you to track your overall spending through your credit card bill or your online account, which can help you establish a budget and recognize where you should cut back to save money throughout the year.
Some cards, like the Apple Credit Card, even have personal finance management tools you can access on your smartphone or your online account.
Print out your credit card statements and highlight purchases by category using different color highlighters to see where you spent the most.
5. Enjoy your desired perks
Another big benefit of credit cards is that you can choose the card that works best for you, says Mike Kinane, former head of U.S. bankcard at TD Bank.
For instance, if you dine out frequently, you may want to consider a card that will reward you a higher amount for restaurants.
Or, if you’re a frequent commuter or traveler, you may want a card with gas-specific rewards.
“Those with more than one credit card can prioritize using the appropriate card for different types of purchases to gain more rewards,” Kinane says.
6. Access purchase and price protection
While policies may differ, most card issuers offer purchase protection, which allows cardholders to file a claim on eligible damaged or stolen items for a limited time after the date of purchase, Kinane says.
Some card issuers will offer a refund on a purchase if the retailer drops the price of the item within a specified window, according to Kinane.
“For example, if you purchase a TV for $500 and the price drops to $350 a week later, you might be eligible for a refund of the difference,” he says.
Make sure you check with your card issuer to find out what its policy is on price protection because many issuers have dropped this coverage in recent years. For example, Citi, USAA and Barclays all ended their price protection benefits in 2019.
Credit cards issuers can offer other types of benefits like travel insurance and cellphone protection.
7. Make safe payments
Credit cards are safer because they’re not tied to the funds in your bank account. All credit cards offer some form of fraud protection — which means you aren’t responsible if your card is stolen and someone runs up big bills, said April Lewis-Parks, director of financial education for Consolidated Credit.
If you suspect your credit card has been stolen or you see suspicious charges on your credit report, your credit card issuer can easily cancel your card and rectify the situation, and it is usually able to cover the fraudulent charges.
The Fair Credit Billing Act (FCBA) protects customers when fraudulent transactions are made to a credit card account. Under federal law, if unauthorized charges are made with a credit card, the maximum amount a customer can be liable for is $50.
“As a preventive measure, you can also set up transaction alerts that can help you spot fraud by notifying you when your card is charged over a certain amount,” Kinane says.
8. Simplify international travel
Dr. Sandi Webster, CEO & chief learning officer of Sandi Webster LLC, says using a credit card when you travel overseas is far better than carrying a large amount of cash, which could be lost or stolen.
If you do want to use a card for purchases while you’re traveling, however, make sure you choose one that does not charge foreign transaction fees.
“Sometimes you even get a break because the charge takes a few weeks to be processed to your card, and by then, the currency exchange rate may be in your favor,” Webster says.
9. Pay bills automatically
Forgot to pay your bills? … Don’t worry, it happens — but it doesn’t have to. With automatic payments, you can rest easy knowing that all your accounts will stay up to date. With this perk, you can avoid late fees and keep your card active without much effort.
Keeping your credit card active and then paying off the balance helps you build your credit score because the length of your credit history contributes to your score.
Activating automatic payments does not mean you should completely forget about monitoring your transactions and payments. Make sure you keep an eye on your accounts.
The key to enjoying all of these credit card perks is to make all monthly payments on time and pay off your balance in full whenever possible. That way, you can access the rewards and convenience that credit cards have to offer without being hit with pricey interest charges and unnecessary fees. And, a bonus — you might even get rewarded for using your card responsibly.
Information about the Apple Credit Card has been collected independently by CreditCards.com. The issuer did not provide the details, nor is it responsible for their accuracy.