While the interest-free credit period, the facility of statement balance rollover, and the rewards points program are invariably some of the better-known facilities of any credit card, there are often many more benefits depending on the kind of card you have, some of which may be tucked away in the fine print. You may not be even aware of them.
According to Cnbc.com, more perks are usually offered by cards that charge annual fees. Many of these features that provide significant savings, conveniences, and peace of mind may already be present in your existing card. Here’s what you should be looking out for:
If you purchase something with your card, it may extend the original manufacturer’s warranty on the item by up to two years. This additional protection is often better than many of the optional extended warranty policies sold at the retail stores, and the best thing is that the credit card issuer offers it for free.
However, the extent of the coverage differs as per the card used though most expensive electronic items like laptops and TVs will be eligible for the OEM warranty. To make a claim, you will need to report it to the card issuer and provide the documentation asked for, which typically includes the original receipt, copy of the card statement, and repair/replacement quotes.
The return protection facility provided by some credit cards extends the time available to return goods that you have purchased provided they qualified for returns in the first place.
Some cards will also allow customers to return items that have been opened that most stores don’t accept though the goods must be in “like new” condition.
You will need to keep in mind the exclusions to this facility and the monetary caps per item and account. For example, the Chase Sapphire Reserve card has a limit of $500 per item and a limit of 90 days for initiating the return. Even though some cards may require you to bear the shipping costs for the return, it is still a valuable perk in times of need.
It can be terrible to buy something you have hankered for and then lose it or have it damaged unexpectedly. Many cards cover loss or damage to new items, sometimes even up to $1,000 per item, if they are lost, stolen, or damaged within the first 90 days after purchase.
Claims need to be filed with the card company with proof of purchase, photographs of the item, and a police report in case of theft. Some cards will not entertain accidental losses or damage due to wear and tear. Purchase protection is a feature of all Visa Signature, Visa Infinite, and Amex cards, while in the case of MasterCard, it is decided by the individual card issuer.
If, like most people, you have been overspending and not keeping tight control over your finances, you may likely have missed making loan repayments or credit card payments and ended up damaging your credit. With a poor credit score, you will find it more difficult to access credit and be charged more interest.
However, if you are interested in repairing your credit score, you can use your credit cards to help you do that by learning to use them responsibly. Some practical tips on how to maintain a good credit score:
Pay Your Credit Card Dues on Time
Your credit score is essentially a measure of you well you can manage debt. One of the most vital aspects credit agencies monitor is your record of making the payment on time and to what extent you pay off your dues. With FICO giving as much as 35% weight to timely payments to your credit score, paying on time is among the most effective things you can do to build credit.
Treat Credit Cards Just Like Debit Cards
The main reason why people tend to overspend using credit cards is that there is no immediate impact on your bank balance. Old-timers will recall Fingerhut’s coupon system as among the first retail credit systems designed to encourage customers to buy and pay over a long period.
Make it a point to use your credit card only for an amount that you know that you can repay on the due date mentioned on the card statement. Remember, any balance you carry over attracts a very high-interest rate that can be a substantial drain on your resources.
Keep Your Credit Utilization Low
Even if your credit card has a healthy credit limit, it is not a good idea to max it out because it sends out a signal to the credit monitoring agencies that your finances are overextended.
Since FICO assigns a 30% weight to the credit utilization ratio, the lower the balance you keep on your credit cards, the better it is for building your credit. Typically, it would be best if you aimed to keep the exposure to less than 30%, though according to cnbc.com, even anything above 5% can start hurting your credit score.
Keep Your Credit Cards Active
FICO gives a 15% weight to the length of the card usage. This makes it important to start using credit cards as soon as possible and use them regularly and responsibly.
Do not get tempted by promotional offers. Sign up on new credit cards just for the bonus and then close them as it sends out wrong signals to the credit agencies. Rather keep as many cards as you can manage well and shuffle them so that they are all in use regularly
Very often, customers signup for credit cards attracted by the features and benefits that are heavily promoted. However, many credit cards have many precious perks hidden away in the terms and conditions, which only come to light if you carefully examine the cardholder agreement and benefits guide.