5 Reasons to Use Your Credit Card for Holiday Purchases

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

7 Tips for First-Time Credit Card Users

It’s almost a rite of passage for finances: You get a credit card. Many of us look forward to the first credit card. It seems like a big step, and it really is — if you want the credit score it takes to buy a house or a car at a good interest rate later on down the road.

It’s important understand, though, that a credit card isn’t your money. It’s money you borrow from the credit card issuer. This means that you have to repay the money. While credit cards can be great tools for your finances, including helping you manage your cash flow, you do have to be careful, since it’s easy to fall into the debt trap.

If you are preparing to use your first credit card, here are 7 tips to keep in mind — and they aren’t bad reminders for those who have credit cards for a long time:


1. Create a Budget and Stick With It
 
The most important tip for first-time credit card users (and for anyone) is to have a plan for your money. Create a spending plan, or a budget, and stick with it. Your credit card should be part of this budget. If you stick to your spending plan, you will be less likely to find yourself over-leveraged with debt. If you can’t afford it in your budget, don’t use your credit card to buy it.

2. Pay Off the Balance Each Month

If you are using your credit card within the confines of your budget, it shouldn’t be a problem to pay off the balance each month. You should pay off your balance every month in order to avoid interest fees. Carrying a balance results in interest, and that can start to add up and eat away at your wealth. Make sure that you can pay off what you put on your card.

3. Don’t Get too Excited about a Credit Limit Increase

A credit limit increase can seem like an exciting reward. For many first-time credit card users, the initial credit limit is often between $500 and $900. However, after a few months of responsible behavior, you might receive a higher limit. I remember how excited I was when the credit limit on my first card was bumped to $1,200 from the initial $800. I forgot that this wasn’t my money. I didn’t magically have a higher income to pay off the larger amount. While a credit limit increase can help your credit score due to a better-looking credit utilization, you shouldn’t spend up to your new limit.

4. Avoid Cash Advances

The interest rate on cash advances is often higher than your purchase APR. On top of that, you might be charged a fee for the cash advance. Plus, if you get the cash advance at an ATM, you’ll have those fees to pay as well. A cash advance can quickly become an expensive proposition. Live within your means so that your bank account can be the source of needed cash.

5. Pay Your Bill On Time

One of the most important things you can do is to pay your bill on time and pay at least the minimum. Late fees can add up quickly, and last payments don’t look good on your credit report. In fact, your payment history is the most important influencer of your credit score.

6. Pay Attention to What Your Credit Issuer Sends You

If you want to keep up with the changes to the terms and conditions of your credit card, you need to pay attention the materials your credit issuer sends you. Don’t ignore the new credit agreements. Issuers have been providing notice to add annual fees, and increase other fees. If you want to know what’s happening with your card, you need to pay attention.

7. Don’t Casually Share Your Credit Card Information

Remember to keep your credit card information private. Don’t give out your account number — or other information — to people who ask for it online via email or chat, or who call you and ask for it over the phone. Only provide information to those you actually contact for a specific purpose. When using your credit card online, verify that you are on a secure site before entering your credit card information.

source: financialhighway.com