I’m going to admit to some strange behavior, and I hope you won’t hold it against me. It involves a little ritual I go through whenever I receive a new credit card.
Of course I open the envelope, inspect the card, decide if I like the look, and call or go online to activate it. But that’s not the weird part. I then sit down and actually read the Guide to Benefits. I get a slight endorphin high seeing all the cool stuff my new piece of plastic brings. Of course, I researched the credit card before I ever applied, so I know the obvious benefits such as the percentage of cash back, bonus points, and such, but sometimes I find a hidden gem in the guide.
I was reminded of this today when I received a debit card from my bank. Following my ritual, I pulled out the pamphlet that came with the card, but found that it was nothing but legal disclosures, without a single benefit. I am aware that debit cards really don’t provide any benefits, but recently, to make them slightly more palatable, some banks have started offering small benefits, such as 1% cash back. In keeping with this trend, I thought I might find something, anything, to incentivize me to use a debit card instead of a credit card. But there was nothing.
Why would anyone give up the benefits of using a credit card in order to use a debit card?
Like me, there are many who enjoy the pure bliss of a debt-free life. To that end, they avoid any possibility of ever incurring debt, by using debit cards instead of credit cards. If they must take that step to avoid any debt, then I say, go with God. But as I explained in this article about the cash tax, it is undeniable that paying with a debit card is far more expensive in terms of what you give up.
Below, I’ll point out some of the lesser-known credit card benefits that you may not be using. Statistically, most never use their credit cards’ benefits, except those that come automatically, like cash back. But the fact that a benefit is seldom used, is not an argument against that benefit. You just need to be a person who makes the mental decision to maximize the benefits of your credit cards. Once you fully comprehend the dollar value of these benefits, you will not be one to ignore them.
1. Roadside Assistance
I won’t be canceling my AAA membership anytime soon. Aside from the roadside assistance, there are myriad other benefits, including the amazing battery warranty. (Amazingly, in the age of satellite navigation, AAA still provides paper TripTiks. Remember those?) However, the basic AAA membership is limited to four emergency roadside assistance calls. If you have a beater car and end up burning through those four calls, it’s good to know that many credit cards also offer roadside assistance.
Terms and conditions will vary by card (if it is offered at all), but if you have a Visa card, regardless of the issuer, you likely have some coverage. For a flat fee of $69.95, you can get a tire change, jump start, gas delivery, lockout service, winched out of whatever you got yourself into, and of course towing. That’s certainly not the free service some of the cards offer, but it is a heck of a lot cheaper than what you might normally pay. On the other end of the spectrum, the Chase Sapphire Reserve and United Explorer both reimburse up to $50 for any roadside assistance call. Check your cards to see what they offer.
2. Cell Phone Coverage
AppleCare for your new iPhone costs $149, and extends your warranty to 24 months. It covers two incidents of accidental damage with a service fee of $29 for screen damage and $99 for other damage. If you want to also protect your phone against theft and loss, then the price is $299. Without the insurance, you’ll pay $199 to $329 for screen repair, depending on your phone and the screen size.
But many credit cards offer cell phone protection, including protection against theft. Of the cards that offer such protection, most will reimburse up to $600 to repair or replace the phone, up to $1,200 per year, with a $25 deductible. The Citi Prestige card is better, with $1,000 per claim and up to $1,500 per year.
Another perfect example of the price you pay for using a debit card. Buy that fancy new phone with your debit card, and you’ll have to come out of pocket another $299 for protection against damage, theft, and loss, or you can buy it with a credit card, and have it covered against those things for free. However, admittedly, given how expensive iPhones have become, the $600 or even $1,000 of coverage would probably not fully cover the replacement cost. But if you would not have purchased AppleCare, then you are way ahead.
Note that to get the coverage, you must be paying your cell phone bill with the credit card. And all of this applies to Android phones, but it is not as easy to make the comparisons.
3. Extended Warranty
This is one of my favorites; one that I have made good use of.
Many credit cards offer free extended warranties on your purchases. Most cards will extend a manufacturer’s warranty of three years or less, an additional year. So, if you buy a TV with a one year warranty, you double it. Citi is an overachiever in this category, with some cards adding TWO years to any warranty of five years or less.
To measure the value of this credit card benefit, I took four purchases that I am contemplating in the near future, and put them in my shopping cart on Amazon, since it almost always pops up an offer for an extended warranty. Here are the four items, and what Amazon charged for an extended warranty:
|Sony XR85X95K 85″ 4K TV
|Microsoft Surface Pro 9
We can discuss another day whether buying an extended warranty is a good financial move, but certainly it makes infinite sense to take one for free if it is available. To get coverage on these items would cost $522. Just by buying these with items with my Citi card, I’ll get comparable coverage for free. And I will say it again here in case you missed it above, I never carry a balance, so these benefits truly cost me nothing. The best cards to get for the extended warranty are the Chase Freedom Flex and any of the Citi cards.
4. Rental Car Insurance
Hopefully this is one you are well aware of, because if not then you have likely been spending money or taking risks unnecessarily.
Being a cheap son-of-a-gun, I typically rent cars from the super bargain companies. You know, the ones where you take the airport shuttle to the car rental place, and then have to board a second shuttle that takes you to a dirt lot somewhere. I think these places make their money from the rental insurance instead of the car, because they launch into a really hard sell for the insurance, explaining all the horribles that will befall me if I don’t opt for the $39 per day insurance plan; often more than I am paying for the car.
Most travel credit cards offer rental insurance, so you never need to buy the expensive add-on coverage sold by the rental company. Note, however, that in most instances, the coverage is secondary, meaning that a claim will first be made to your insurer. The credit card company pulls out its checkbook only if your insurance does not cover the claim. But there are a number of cards offering primary coverage as I write this, including the Chase Sapphire Reserve, Chase Sapphire Preferred, Capital One Venture X, American Express Platinum, and all of the Chase Ink business cards. Out of all of them, the Chase Ink Business Cash credit card is the most impressive, since it has no annual fee. With primary coverage, the credit card company handles the claim. Your insurer won’t get a call, and won’t have any reason to raise your premiums.
5. Concierge Service
I plan to do a separate article on this benefit, because I have very limited experience using it. On one occasion where I really needed to get some flowers delivered quickly and assuredly (I’ll let you write your own back story), I called my card’s concierge, and it went quite flawlessly.
For my article, I’m going to come up with some challenging scenarios, to see how the different companies perform. But for now, just know that the service is available to you if something arises. The cliché use for a credit card concierge is for last minute restaurant reservations, but I am skeptical that such a service could offer any special magic in that regard. In my mind, the better use is simply as a time saver. Spend an hour trying to figure out the closest scuba diving charter service to your hotel with the best reviews, or put a concierge on the job.
6. Travel Accident Insurance
Credit cards offer many travel benefits, such as free checked bags, travel delay/cancellation insurance, luggage insurance, and others. But since we are discussing overlooked benefits, I’ll end with travel accident insurance.
Back in the day, you could do a final good deed for your family, and buy travel accident insurance out of a machine right before you boarded, in case your flight literally took you to your FINAL destination. Now, that benefit comes with your credit card. No sign up or registration is required, but a claim must be made within a short window, typically 20 days.
This is that macabre coverage, where you get so much for losing fingers, entire limbs, vision in one eye versus vision in both, etc. If you are the blind, fingerless person making the claim, then no problem. You will certainly know that you got hurt and which credit card you used to pay for the ticket (although filling out the forms may be a challenge). But if you shuffle off this mortal coil, then you’d better have told someone about the coverage so the claim can be made. You can designate your beneficiary with the credit card company before flying (or afterwards by Ouija board). Otherwise, it goes to your beneficiaries in a specified order. Depending on your credit card, and what happens to you, the coverage will range from $250,000 to $1,000,000.
Don’t let these benefits get away.
Credit cards are a bit like health club memberships, with the company betting you won’t avail yourself of the benefits. As you can see from the above, the benefits have some real value, but only if you use them.
If you have multiple credit cards, come that moment when you are about to pay for your rental car, will you remember which one offers the best combination of points and accident coverage? During the phrenetic shopping at Best Buy on Black Friday, when you managed to grab the last 90″ television selling for just $999, will you remember which of your cards offers the best extended warranty?
Yes, I recognize the nerd factor, but when I get a new card and peruse the Guide to Benefits, I take a minute to create a small sticker for the back of the card, listing the key benefits. Chuckle if you want, but if my $6,000 MacBook Pro craps out during that second year of the extended warranty I got because my sticker reminded me to use my Citi card, then I can deal with your derision. (I speak only figuratively, because I know you would never be derisive.)