What Extra Benefits can you Get with a Credit Card?
Up to 56 days interest free credit, cash incentive, rewards and flexibility are just some of the benefits of a credit card.
More from Choosing a Credit Card
18 December 2008
The extra benefits of a credit card
If you use your credit card rather than a different form of payment this can give you extra consumer protection. ”
A credit card can be a very good payment tool for everyday spending as well as for larger purchases.
It allows the user a flexible way to pay and gives you the choice to decide;
How much you want to spend?
How much you can afford to borrow?
How you can budget to pay off an unpaid balance?
There are, however, extra benefits that come with a credit card that some consumers are unaware of.
Consumer protection on your spending
If you use your credit card rather than a different form of payment this can give you extra consumer protection. Under section 75 of the Consumer Credit Act if you pay for items from £100 up to £30,000 both the card issuer and the trader have responsibility under a rule called equal liability. If anything goes wrong such as the goods are damaged or the company goes into liquidation, you will have protection.
This is why, for example, many people book flights or a package holiday on their credit card and then pay it off after they have made the transaction. This consumer protection does not exist if you pay by cash or debit card. Using a credit card, this protection also applies if you part pay for something.
The same rights are also applicable to goods brought overseas using your credit card rather than another form of payment. This also includes buying goods for delivery to the UK from overseas by telephone, mail order or over the Internet.
Cashback
The way to make this really work is if you pay off your credit cards in full every month. By putting as much of your allocated monthly purchases on the card and paying the balance off every month, you effectively make money while spending. If you can’t do this it is better to look at another option.
Rewards
The majority of credit card companies offer cards with loyalty or reward schemes such as AirMiles or travel points. If you collect enough you can get a free flight or cruise and although these cards don’t earn you cash, they can save you the money you would have spent on travel. If you pay your card off in full you can really make the rewards schemes work for you.
0% on Purchases
This can be useful if you want to make a large purchase, spread the payments over a period of time without racking up interest. The cost effective way to use this type of card however, is to ensure that you pay for the purchase within the 0% offer period otherwise the item will cost more than you originally bought for, in interest payments.
Price protection
Check the small print of your credit card to see if it includes price protection. This means that if you make a purchase at one price and it becomes cheaper in a sale or a special discounted period, you may be able to claim back the difference. A time period usually applies to this of 60 days from your original purchase and generally covers from £10 to £1,000.
