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When used responsibly, credit cards can provide a lot of value to your everyday spending and more. But while some credit card benefits sound great in theory, they might not provide as much value as you expect. On the other hand, some benefits may be even more lucrative than they seem.
As you're comparing credit cards, here's how to tell whether the benefits they provide are right for you.
Credit Card Benefits That Aren't as Great as They Sound
Picking the right credit card helps ensure you're getting the most out of your daily spending, but the following perks might not be as valuable as you might think.
Rental Car Insurance
A lot of credit cards offer what's called auto rental collision damage waiver, which can help pay for the repair or replacement of a rental car if you get in an accident.
Unfortunately, though, this coverage is considered secondary in most cases. This means that if you have a personal auto insurance policy, you'll first need to file a claim with that carrier and risk a premium hike. The insurance from your card will only kick in to cover your deductible and anything else your primary coverage won't. Some cards do offer primary coverage, which can be helpful if you rent cars often; look for that feature as you compare cards if it's important to you.
Your card may also have limitations that can impact your eligibility. For example, they typically don't include liability coverage, and coverage may be restricted based on the type of vehicle you rent or where you drive it. Be sure to read the fine print before you rent.
If you have a store credit card, you may get the option to finance a larger purchase over six, 12, 18, 24 or even 36 months with no interest if the balance is paid in full by a certain date. But unlike a credit card with a true 0% intro APR, these deferred-interest financing deals will charge you interest retroactively if you fail to pay off the full purchase by the end of the promotional period.
As such, it's best to consider using one of these only if you're confident in your ability to pay back before the offer period ends.
Food Delivery App Memberships
Major credit card issuers have partnered with the likes of DoorDash, Grubhub, Uber Eats, Instacart and more to provide free memberships to their cardholders.
This might sound like a nice perk because it saves you from having to pay the monthly fee, and you can get free delivery on certain orders and discounted service charges. But you'll typically end up paying more when ordering from restaurants and supermarkets on these platforms than if you were to pick up your items yourself.
If you already frequently use the services covered by your card, however, saving on membership costs for something you'd be using anyway could be a good deal.
Many retail credit cards offer a discount on your purchase if you open an account. This might seem tempting when you need to make a major purchase, but compared with traditional credit card intro bonuses, these discounts are often very small.
Also, you can't get the discount unless you're actually approved for the card. While retail cards are easier to get if you have less-than-perfect credit, it's still a risk that you'll be denied. Finally, store credit cards typically come with low credit limits and high APRs, and some only allow you to use your card with the co-branded retailer.
So if you're thinking of getting a retail credit card, don't just sign up to take advantage of the upfront discount. Consider it only if you shop there regularly and expect to get a good long-term value out of the card.
Which Benefits Are More Valuable Than You Might Think?
While there are credit card benefits that aren't as great as they look on the surface, the opposite is also true. The following perks can provide excellent value.
Hotel Anniversary Nights
Many hotel credit cards offer an anniversary free night every time you renew your card and pay the annual fee.
These certificates are usually restricted to lower-category properties, but if you do enough research, you could get hundreds of dollars in value—which often far outweighs a standard hotel credit card annual fee.
Your cellphone may be the most expensive thing you carry around with you every day, and if it gets damaged or stolen, you could be out hundreds of dollars.
But with some cards, simply paying your phone bill with your card grants you $600 or more in coverage against theft or damage. That might not be enough to completely replace a more expensive phone, but the coverage is complimentary.
This benefit is rarer now than it once was, but if you have a card that offers it, take advantage of it as often as possible.
Price protection kicks in if you purchase an item with your card and its price drops within 60 to 120 days, depending on the card. If you can provide evidence of your purchase and the price drop, your card's benefits administrator will send you a check for the difference.
Some of the top travel rewards programs allow you to transfer your points or miles to a partner airline or hotel loyalty program. If the ratio is 1:1, you can often get far more value with a partner than you could with the original rewards program.
This is because general travel rewards programs typically have a set value for their rewards currencies and most airlines and hotels don't, giving you the flexibility to potentially get a higher redemption rate.
Build Good Credit to Get the Best Card Benefits
Credit cards that offer a lot of benefits and perks are typically reserved for consumers with a good credit score or better. Before you apply for a rewards credit card, check your credit score to see if it's enough and consider taking time to improve your credit before you apply.
This process can take time, but the right card can be worth it in the long run.