While credit card rewards save you money in a mostly direct way, credit card perks save you money or give you benefits in more indirect ways, or in special circumstances.
Perks vary quite a bit more from one card to the next than reward point structure. Some cards have more perks than I can even count, while other cards might not have any perks. Therefore, this category will have less of an impact on the comparison of credit cards to other payment forms, but it is still a factor.
Some cards have account credits for certain fees, memberships, or company transactions that save you money if you would normally have spent money on those fees, memberships, or companies. For example, some cards give you a statement credit (meaning the bank pays off that charge on your credit card bill) for paying for a TSA PreCheck membership. So if you already were a PreCheck traveler, or you were considering going for TSA PreCheck, if you have a certain credit card, you can essentially get that membership for free. You can’t do that with cash, checks, or debit cards.
Other statement credits include things like giving you a free number of dollars per month to use toward Lyft, Uber, or Door Dash. If you use these or other services that a card offers credits for, you can get a free ride or a free delivery once per month, or up to a certain number per year, just by owning the card. Again, depending on the card, this could save you more money on top of the other benefits the card provides.
Another travel related perk is airport lounge access. There are lounges in airports that are only available to specific travelers based on their ticket class, account status, or credit card ownership. Think of the USO; it’s a lounge in airports for military members. Similarly, there are lounges in certain airports that you can only access if you have a certain credit card. What’s the big deal? Well some of these lounges have complimentary snacks, meals, even a place to nap. The more luxurious the lounge, the more exclusive the card you need to have to gain access. It might not be worth it to get a card specifically to access a lounge, but if you already have a certain card, then lounge access just adds to its list of perks. If you travel more than the average person, and are already spending time in many airports, having lounge access might be a perk that makes one card more “worth it” than a competitor’s credit card.
Some of the lesser known perks on credit cards include things like purchase protection, warranty plans, rental car insurance, trip cancellation coverage and other travel related reimbursements, and my favorite, the security and liability protection that is inherent to credit cards (this is covered in a later post).
Purchase protection and warranty plans give you the ability to get your money back for purchases following certain events, whether that be a defective product that an unscrupulous manufacturer refuses to honor, theft, accidental damage, and other events, depending on your credit card agreement. That means that, depending on your scenario, if you bought something with a credit card and the merchant and manufacturer both told you to take a hike when you tried to get a refund, your bank or credit card company will take care of you and get your money back or reimburse you for a replacement.
If you rent a car and pay for the entire rental reservation with your credit card, you might be able to waive the additional insurance coverage the car rental place tries to get you to purchase. Many credit cards will cover your rental vehicle with the kind of insurance that you would normally need to pay for, free of charge. Additionally, if your trip needs to be cancelled or rescheduled, many credit cards protect you from paying fees to cancel or change a flight, without needing to purchase the upfront trip cancellation insurance that travel booking sites and airlines usually try to sell you at the checkout.
While perks, rewards, and the benefits of a good credit score are all pretty straight forward, another way that credit cards benefit you over cash, debit cards, and checks, is a little more controversial. I like to call it strategic spending, but it’s commonly known as financing. While some will say that financing is to be avoided, there are ways to do it that can benefit you. As long as it’s done responsibly, strategic spending can save you money and provide you with liquidity.
Lance Out Loud 