Week four of the rewards refresh: Perks beyond rewards

Welcome back. This is the fourth installment in a six-week quest to identify the best credit card for you.

Whether you’re thinking of signing up for a new card or sorting through what you already have, or even if you’re just browsing, I’m going to share my best practices for making sense of what can be a complicated decision.

The steps are intended to be completed in order but don’t worry if you missed anything. There’s still time to review part one (sorting through the cards you already have), part two (examining your spending habits) and part three (prioritizing the right rewards). Now, on to round four.

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Your fourth assignment

Rewards are great, but they’re not the only advantage of using credit cards. Cardholders can get many other perks such as purchase protection, extended warranties and travel insurance. Sometimes it makes sense to sacrifice rewards in the short term to prioritize these longer-term benefits.

This week, I will help you consider these and other less heralded but extremely valuable card features. You might already have access to some of them on your current cards. Or, if not, you might want to seek them out with your next card application.

How purchase protection saved me $299

Last year, I had a $299 Apple Watch repair covered via my Chase Freedom card. It’s closed to new applicants, but its successor – the Chase Freedom Flex ℠ – offers the same coverage. Eligible purchases are covered against damage and theft for 120 days (up to $500 per claim and $50,000 per account).

I was so glad I paid for the watch with my Freedom card. I only earned 1% cash back on the transaction, which worked out to about $4. I could have doubled that if I had used a 2% cash back card, but the Freedom’s excellent purchase protection coverage far outweighed those “lost” rewards.

Extended warranties

You can also get added peace of mind by paying with a credit card that offers generous extended warranty coverage. Several Citi cards – including the Citi Premier® Card and the Citi Rewards+® Card – provide two additional years of warranty protection on top of the manufacturer’s warranty (up to a total of seven years and $10,000 per item).

Cellphone insurance

A growing number of credit cards offer cellphone insurance as long as cardholders pay their monthly phone bills with the right card. The Wells Fargo Active Cash® Card is a good example. It reimburses up to $600 (with a $25 deductible) for damages and theft.

Return protection

Did you know that some credit card companies will accept returns when merchants won’t? For example, the Blue Cash Preferred® Card from American Express reimburses cardholders up to $300 per item and $1,000 per year for returns that merchants won’t accept within 90 days of purchase.

Travel insurance

So far, we’ve focused on physical goods. Credit cards can also help protect you against problems with travel services. The Chase Sapphire Reserve card has my favorite travel insurance benefits, ranging from primary car rental insurance to trip cancellation and interruption insurance (which reimburses up to $10,000 per person and $20,000 per trip if cardholders need to cancel a trip or cut one short due to illness, severe weather or another covered situation). You can also get financial assistance with lost or delayed luggage.

Free checked bags and priority boarding

Many airline credit cards will give you – and often your travel companions as well – at least one free checked bag. The Delta SkyMiles® Gold American Express Card is exceptionally generous. It gives cardholders and up to eight travel companions a free checked bag on every Delta flight. Since checking a bag costs $60 per person on each round trip, it’s easy to quickly offset the $99 annual fee. The card also comes with free Main Cabin 1 Priority Boarding. Airline cards are especially beneficial when you fly a lot and are loyal to a particular airline, but even occasional travelers can benefit, as this example shows.

Customer service

This is the least tangible item on the list, but it’s still essential. American Express and Discover are especially good at delighting their customers, having placed first and second in the J.D. Power U.S. Credit Card Satisfaction Study every year since it began in 2007. Amex has taken the top spot 11 times with four second-place finishes, while Discover has five wins and 10 seconds (the two companies shared the title in 2014).

Shopping extras

I’ve made good use of a complimentary ShopRunner membership, and so can you, thanks to all U.S. American Express consumer and small business cards as well as all World and World Elite Mastercards. Yahoo and PayPal customers can also qualify for free access to this service that usually costs $79 per year and provides free two-day shipping and returns from more than 100 popular retailers.

Bottom line

If you’ve ever lost money because something broke or a trip was derailed by bad weather, or if you’ve been dissatisfied by a customer service experience, you know how impactful these “soft” benefits can be. The programs detailed above don’t get as many headlines as rewards and sign-up bonuses, but they can pay off in actual dollars and make your life easier.

Consider these factors when evaluating the best credit cards for you. If you travel a lot, a card with solid travel insurance benefits can be tremendously valuable. If you’re planning to buy some expensive appliances and electronics, be sure to pay with a card that offers generous purchase protection and extended warranty coverage. And good customer service always has your back.

Next week, on the fifth stop along our journey to picking the best cards, we’ll get even more specific about tools that can help match you with the right options.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.