For most people, becoming approved for their first credit card is a major step in becoming an adult. Using a credit card over a debit card has its obvious advantages, such as the ability to make large purchases or the ability to access funds while traveling abroad. However, today’s credit cards offer even more perks than the cards of the past. Here are five surprising benefits when making purchases on a credit card.
Benefits You Can Get on Credit Card Purchases
1. Reward Points
These days, virtually every credit card company offers some sort of rewards card that offers points per dollar spent on the card. Typically, these reward points can be exchanged for cash back, frequent flier miles, travel discounts, and more. For people who would be spending money anyway, credit cards offer an opportunity to pay bills or shop for groceries and earn rewards at the same time. The key is to choose a credit card with rewards that fits the customer’s spending habits. Also, it’s imperative to pay off the balance every month. Otherwise, accrued interest can overtake the rewards offered by the card.
2. Sign-up Bonuses
Speaking of rewards points, some credit cards will occasionally offer bonus points with first-time sign-up. Typically, sign-up bonuses come with additional requirements. Applicants may be required to spend a certain dollar amount within the first three months of opening the card, or they may be required to meet a minimum credit score to be eligible for the bonus.
3. Fraud Protection
With so much business being conducted online these days, fraud has become one of the top security concerns for credit card users. Fortunately, it’s easy to freeze or reverse fraudulent charges on a credit card while the credit card company resolves issues on its end. On the other hand, fraudulent charges on a debit card immediately drain the associated checking account of its funds. In these cases, it tends to be more difficult to restore funds from fraudulent charges compared to the relative ease offered by credit cards.
4. Trip Insurance
Many airlines and cruise lines offer optional trip insurance in case of unexpected cancellations or personal emergencies that would prevent travel. However, not many people realize that some credit cards offer the same protection for travel-related purchases made on the card. Other credit cards may offer additional policies for covering injuries sustained while traveling, lost luggage, or even emergency evacuations.
5. Crypto Rewards
An exciting new feature available from some credit card companies is the crypto reward credit card. Like a regular rewards card, crypto credit cards provide the option to turn rewards points into cryptocurrency. For example, the experts at SoFi recommend their new credit card, which offers “3% cashback on all purchases” that can be redeemed “directly into crypto.”
Obviously, the benefits of credit cards are numerous, but they’re only as good as the financial savviness of the card’s owner. To get the most out of credit card rewards, it’s necessary to be disciplined about spending and pay off the balance every month to avoid interest charges.