Why your credit card is like the family dog
Be a responsible and thoughtful owner, and both will reward you handsomely.
This post comes from Allison Martin at partner site Money Talks News.
The credit card has been called both good and evil, depending on how it's being used.
Or let's look at it another way: Like the family dog, it can be your best friend if you treat it right, but it can bite you if you downright abuse it.
Here are some of the ways the magic plastic can be a trusted friend.
Safer online shopping
When was the last time you paid for a purchase by handing cash to the computer screen?
At the conclusion of your purchase, you are prompted to enter the number for either your debit card or your credit card. If you want to protect your hard-earned funds from possibly being compromised, you'll use your credit card because it lets you off the hook if your information is stolen or used fraudulently.
Although debit cards also offer zero-liability protection, the cash in your account could remain missing until the case is resolved and the financial institution rules in your favor. That’s a real hassle when you have other bills to pay.
Select credit card issuers will extend the original manufacturer's warranty for up to an additional year.
If you are planning to buy a big-ticket item, such as a washer and dryer combo, expensive laptop or high-end entertainment system, consider using your credit card to take care of the purchase and to give yourself an added layer of protection. But be sure to check with your credit card issuer before moving forward to see if it offers this benefit to cardholders.
How would you like to earn free flights, hotel stays, cash back and valuable merchandise?
A rewards credit card will definitely come in handy to accomplish this objective as long as it is used responsibly and the costs of accumulating perks do not outweigh the benefits.
You're not being smart if you're not paying off your balance on a rewards card each month.
Wondering if you really need that car rental insurance being offered to you at a rate that is equivalent to the daily cost of the rental? Not at all if your credit card company provides this form of coverage when you use it to rent the car.
A number of credit cards also offer roadside assistance, luggage protection, trip interruption or cancellation coverage, and accidental death or dismemberment coverage. With these protections, you can rest assured that you've got a friend in your credit card the next time you're traveling.
Ever tried renting a car with a debit card or cash? What a nightmare! Most companies won't accept cash, and those that allow debit cards typically require a mountain of paperwork along with a hefty hold on your account.
Likewise, expect a hold on your bank account for making a hotel reservation with your debit card, again tying up funds in excess of what you intend to spend. That hold can last longer than you'd expect, tying up your money and leading to possible overdraft fees.
How about purchasing a flight? The Delta website says debit cards are welcome but made these additional points:
Some banks may limit your per-transaction amount.
Delays can occur when charges are reversed on a debit card.
Bank processing times vary for removing the hold against your account.
Although there are ways to build your credit without using the magic plastic, it is quite effective if used responsibly. It builds your credit history if you make timely payments each month and keep the balances low.
That has the potential to save you a ton of money on other types of loans, because the lowest interest rates tend to go to those individuals with the best credit history and scores.
Having a tough time tracking what you spent over the course of the past month? The magic plastic is here to save the day, as the monthly statement provides a comprehensive breakdown.
The end-of-year compilation sent to business owners is a lifesaver, and some consumer cards give you a year-end breakdown on your spending.
Did you receive a good or service that did not meet the standard for which you paid? If it was paid for with a credit card and you have sufficient evidence, the card issuer can grant you a chargeback from the vendor's account.
This is arguably one of the most beneficial features of a credit card. But first try to see if the vendor will make it right before involving the card company.
With rewards credit cards, you may receive royal treatment when traveling -- access to an upscale lounge at the airport or priority boarding for a flight. Not a bad deal at all if the benefits of owning the card outweigh the costs.
Select credit card issuers also offer exclusive access to discounted tickets for entertainment events.
Convenience and peace of mind
Traveling for an extended period of time? There's nothing more annoying than lugging around a wad of cash and finding yourself in panic mode if it's stolen or lost. With credit cards, convenience is inevitable, and an added bonus is the emergency cash assistance that may be available to you if your money disappears.
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