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by Dan Caplinger
The rise of electronic payments has revolutionized the way people spend money. But with debit cards and mobile payment systems gaining in popularity, it’s easy to forgot the many benefits that old-fashioned credit cards have over newer payment methods.
1. Easier Dispute Resolution. Credit cards offer broad protections in the event that your card is used for fraudulent transactions, including a well-established dispute resolution process and maximum liability limits. Contrary to what many people think, debit cards do permit you to dispute erroneous purchases, but unlike credit cards, the money has typically already left your bank account by the time you see a bad debit-card transaction. Credit card companies will immediately credit your account for the disputed amount until the dispute is resolved.
2. Better Cash or Mileage Awards. Some debit cards have gotten into the rewards game, but credit cards still have far-and-away the best perks for frequent users. From cash to airline miles and other benefits, getting between 1 percent and 2 percent of your spending back in the form of rewards is common with the best credit card reward programs. You can often do even better with specialty cards on certain categories of purchases, such as gas or travel.
3. Car Rental Insurance. Many credit cards cover damage or loss when you rent a car. That can save you from having to pay for the insurance coverage that rental companies offer. Most credit card car rental insurance acts as a backstop to your existing insurance coverage, so don’t expect it to help you avoid having to file a claim with your regular insurance company. But with many damage-waiver provisions costing $25 per day or more at the rental counter, credit card-based insurance can be a real money-saver.
4. Extra Travel Perks and Protection. In addition to car-rental insurance, some credit cards offer a full range of travel-related perks. If you buy an entire trip with a card, you might be covered with trip cancellation or interruption insurance that will either reimburse you for a trip you weren’t able to take or pay for extra expenses in getting you to your destination. Other benefits can include trip-delay coverage to pay for meals and hotels if your flight is delayed for certain covered reasons, as well as lost or delayed baggage and flight accident insurance. Some cards even provide roadside assistance, as well as help in getting referred to a doctor or other medical professional when you’re traveling.
5. Protection on Your Purchases. Some credit cards provide a number of other protection programs. Price protection will refund the difference if you find a lower price for a product you bought within a certain time frame, while purchase protection and extended warranty coverage can reimburse you or cover the cost of a replacement if something you buy is lost, stolen or breaks. All those perks come with conditions and maximum amounts, but they still provide extra benefits that you won’t find with most other payment methods, so be sure to check and see if your plastic offers them.