Credit cards tend to get a bad rap. Many people focus on the interest charged, but forget about the perks and the protections that come with credit card use. When used with savvy and intelligence, a credit card can be a valuable financial tool.
As the holiday shopping season ramps up, consider using your credit card to make seasonal purchases. You have the opportunity to earn rewards, and you often receive a number of protections that may not be available with debit cards — and that certainly aren’t available when you pay with cash.
1. Extended Warranty
Many credit cards offer extended warranties among their perks. The extended warranty applies on top of the manufacturer’s warranty. If the item breaks after the standard warranty, but before the credit card’s warranty expires, you can still have the item repaired or replaced.Consider electronics, which are popular holiday purchases. Many electronics come with a one-year warranty. Many credit cards will provide an extended warranty that covers an additional six months to one year. Instead of paying for the extended warranty at check out, you get the coverage free when you pay with credit card.
Make sure, though, that you understand how to use the warranty. You usually need the receipt (so save it), along with other information. There may also be a time limit for making a claim.
2. Price Protection
Some credit cards, especially the premier cards that charge annual fees, include price protection. If you find a lower price on an item you have already purchased, you can be refunded the difference.This can be very useful when shopping holiday sales and buying gifts for others. However, price protection usually comes with a time restriction. Normally, the lower price has to appear within 30, 60, or 90 days. Check the policy so that you have an idea of the time limit.
You will need proof of the lower price. Save your receipts, and be sure that you document the lower-priced item. A sales ad promoting the lower price is one of your best options, or a screenshot or printout of an online price on the item.
3. Returns
Some credit cards will reimburse you if you want to make a return but the store won’t allow it. So, for example, if you purchase something, then decide later that you don’t want it, your credit card might refund you the purchase price.Before you can use this perk, however, you have to try to return it to the store. If you can’t return it, you might receive a refund for the item if you show a copy of your receipt. Often, as long as you apply for the refund within the time limit (usually 30 or 60 days), it doesn’t matter why you wanted the return.
Most credit cards limit the dollar amounts you can be refunded. There is usually a per-item limit of up to between $200 and $500, and often an annual limit of between $1,000 and $3,000. Check your credit card terms for policy details.
4. Dispute Charges on Damaged Online Purchases
I do a lot of my holiday shopping online. Using a credit card provides peace of mind, since I know that if an item is damaged in transit, or if it never arrives, I can dispute the charge. If you are doing a lot of your shopping online, consider using a credit card to pay.The Fair Credit Billing Act provides this protection to consumers when a purchase arrives damaged — or just isn’t delivered. You can dispute the charge fairly easily, and prevent the retailer from being paid.
Realize that the item has to cost at least $50. The law requires that the seller be within 100 miles of your home address, so this can apply to items purchased at local retailers and have delivered to your home (as in the case of a large appliance or piece of furniture). Many credit cards will still let you easily dispute charges even on items shipped from other parts of the country.
However, you do have to try to resolve issues with the seller before turning to your credit card issuer for resolution.
5. Fraudulent Purchases Don’t Come Out of Your Funds
If someone steals your card information and makes fraudulent purchases, you are often better off if you have paid with a credit card rather than a debit card.Some debit cards also feature $0 fraud liability, but often with restrictions, such as requiring you to point out out fraudulent charges within two days, rather than the 60 you have with credit card purchases. Additionally, a PIN entered at the time of purchase may negate your claim to receive the same level of protection. If someone has stolen your card and knows your PIN, you could liable for some of those fraudulent purchases.
And even if your debit card provides all of the protections of a credit card, the fact remains that the money disappears from your account almost instantly. You don’t get the money back until after the issuer is satisfied that the case truly involves fraud. During that time, you won’t have access to those funds.
When your credit card is stolen and used fraudulently, the money used isn’t actually yours — it’s the bank’s money. Your money is still sitting in your checking account, safe and sound. You can dispute the charges and have them removed from your credit statement without ever putting your money at risk.
Smart Credit Card Use
Use your credit card for holiday shopping, but make sure that what you spend fits into your budget. You want to earn the rewards and gain the protections, but you don’t want to pay interest. Pay off the balance immediately, and you will receive the benefits without having to pay the costs.source: wisebread.com
