Everything You Need to Know About Credit Card Benefits

Everything You Need to Know About Credit Card Benefits article image.

The most common reasons for using a credit card are well known: They can help to build your credit, free you up from cash-dependency, allow you to earn rewards, and generally make transactions a smoother experience.

But the benefits don't end there. There are a host of lesser-known perks available to savvy consumers, just waiting to be taken advantage of. Here are some of the best.

Find the best credit cards with Experian.

1. Fraud Protection

Credit card companies will almost always refund 100% of your purchases if someone has stolen your card. According to the Fair Credit Billing Act, $50 is the maximum amount of unauthorized charges you'll be responsible for if you use a credit card. These days, many credit card providers have sophisticated technology to detect fraudulent activity and stop it before the transaction even goes through.

While banks will also refund purchases made on your debit card, it will take time for them to reverse the charges. However, if you spot something you don't recognize on your credit card and notify your card issuer, the charge will be put on hold immediately and you won't be billed.

Credit cards are also helpful for disputing charges on damaged items, poor service or goods that were never delivered. If you bought a pair of shoes online and they sent you the wrong size, you can ask the credit card company for a chargeback if the original seller won't give you a refund. Be careful with this option—overusing the chargeback could get you placed on a blacklist database, disrupting your ability to use that card at various retailers and service providers.

2. Travel Insurance

How often have you booked a vacation, only to fall ill or experience some other emergency right before you leave? The best credit card providers will refund your travel-related purchases, such as airline tickets or Airbnb stays—as long as your cancellation reason falls under their purview.

Some credit card issuers will also pay for accidents, delays or trip cancellations that aren't your fault. If a natural disaster strikes your city and your flight has to leave a day late, you may be reimbursed for lost time. Every card has its own unique policy, so read through the contract carefully to see what travel benefits or travel insurance they provide. Some have strict caps on how much they'll cover, so it's still a good idea to have enough saved to cover a small emergency.

3. Roadside Assistance

When your car breaks down, your most common options are to call AAA or find a towing service. Fortunately, some credit card providers have their own roadside assistance program available 24/7.

This feature isn't free with the card, but unlike an annual membership to AAA, you won't have to pay for the service unless you use it. Costs vary depending on what you need and what credit card company you're using. If you have a reliable vehicle and rarely go on road trips, relying on your credit card's roadside service is probably more affordable than paying for a yearly membership.

Find the best credit cards with Experian.

4. Extended Warranty

When you buy an item with a warranty, like a laptop or a dishwasher, the store or original manufacturer will often offer an extended warranty for an extra fee. Before you sign up for it, check your credit card terms and conditions to see if they provide a complimentary extended warranty.

Usually, the service adds an extra year to your original warranty for free. The extended warranty won't cover anything outside the scope of the original, so don't assume it's a catch-all for any problem you experience. Keep your original receipt and proof of purchase in case you need to file a claim.

5. Rental Car Insurance

Ever pick up a rental car and sign up for the supplementary insurance, only to feel like you've wasted a hundred bucks? If you have a credit card, you might already be covered by collision damage coverage.

Collision damage coverage includes the damage caused if you scrape the car backing out of a parking spot or if the car is stolen while in your possession. As long as you use the card to pay for the rental car, the coverage is included for free.

6. No Foreign Transaction Fees

If you like to travel abroad with a debit card, you're likely overpaying on foreign transaction fees, usually to the tune of 2-3%. Many credit cards—especially those focused on travel—don't charge foreign transaction fees.

If you spend $1,000 during your trip with a credit card, you'll save $30 in debit card fees. Plus, most travel credit cards offer cash back or points when you use the card, allowing you to earn your way to a free vacation.