Managing credit cards is an important part of personal finances. A credit card gives you lots of spending freedom. Rather than paying cash for a transaction or having to write a personal check, a credit card is a universally accepted form of payment.
In the age of digital transactions, credit cards have become essential. Maintaining online shopping accounts with Amazon and other vendors or online payment systems such as PayPal requires a credit card or bank account from which to draw funds. When you order food from GrubHub, a ride from Uber, or pay for parking with a smartphone app, the transaction is completed by charging your credit card.
If you are going to use a credit card, you may as well earn benefits along the way. The credit card business is highly competitive, so to attract customers, credit card providers offer perks in the form of cash back, shopping points, travel points, special deals, and more. Before choosing a credit card, consider the types of perks that best suit your lifestyle, and understand what to look for before you apply for a card.
Where should you look for credit cards?
When you sign up for a Visa or a Mastercard, you don’t receive the card directly from the credit card company. You must apply through a bank, credit union, or some other financial institution. The credit card company is the custodian of your account. The card itself is issued by a financial institution that extends credit to you and processes credit card payments. When you see credit card ads, they are from the issuing bank seeking to get your business. The issuing bank is responsible for offering any credit card perks.
You have a wide choice of banks and credit unions to choose from when shopping for credit cards. There are several reasons why getting a card from a credit union may be your wisest choice.
Credit unions are not-for-profit institutions structured to serve their member shareholders. That means they tend to offer lower costs and fees, including lower interest rates on credit cards. When you compare average credit card interest rates to credit union rates, you will find that credit unions generally have lower rates. They also tend to have lower or no annual fees and may not charge for services such as balance transfers. Credit unions also have a reputation for superior customer service, which matters when you need to contest a transaction or if you lose your credit card.
Of course, you must qualify to join the credit union first. If you do qualify, then you get perks in addition to credit card incentives such as great rates on loans, lower fees on banking services, and special deals for members only.
What are the 5 most popular credit card perks?
You can find credit card perks that suit any lifestyle, so the question is, what are the best perks for you? Here are some considerations when choosing among the five most popular credit card benefits:
1. Cash Back
Cash rewards cards are very popular. The idea is that you earn cash with every purchase, including extra cash for some types of purchases such as dining or travel. You can use the cash for shopping, paying a portion of your credit card bill, or other purposes. Popular cash back cards also frequently run promotions with major retailers and brands to provide discounts or other advantages. You will find that cash-back cards do tend to have a higher interest rate, so think twice if you plan to carry a credit card balance.
2. Travel Points
Travel cards are also popular. Many credit cards offer rewards for specific hotel chains or airline miles. Travel rewards cards also can offer other value-added perks such as rental car insurance and free travel insurance or emergency coverage. There are usually restrictions, such as when you can travel and how you can use your points, so check the terms of the card before you decide.
3. Fraud Protection
More credit cards come with fraud protection, including identity theft protection, allowing you to lock your card if it’s lost or stolen, or allowing you to put a watch on your card so you must authorize each transaction. One of the benefits of using a credit card rather than a debit card is you have some protection against fraudulent use. If someone steals money from your bank account with your debit card, it may have more of a negative impact on your financial position while you are waiting for the fraud claim to be resolved.
4. Balance Transfers
More consumers are managing their debt with balance transfer credit cards. The idea is to move debt from a high-interest card to cards with a lower APR so you save money by paying lower interest fees. Balance transfer cards can be useful for debt consolidation, but look for cards with low or no fees and make sure you really will save money over time.
5. Payment Protection Insurance
Some credit card companies offer payment protection or debt protection insurance. If you run into financial hardship, payment protection allows you to pause your card payments for a time. There can be downsides to adding payment protection. Sometimes it’s offered for an additional fee, and in other instances, there are exclusions and conditions. Read the fine print before you commit.
Other common benefits to look for include no annual or monthly fees, overdraft protection, and no foreign transaction fees. Business credit cards offer perks designed to help with small-business expenses, capital purchases, and cash management.
iQ has a credit card that meets your needs.
iQ Credit Union offers credit cards with benefits designed to meet our members’ needs. We offer three types of consumer credit cards: the iQCU Visa Platinum® card, the Visa Platinum® Rewards card, and the Visa Signature® Rewards card.
They say there is no free lunch, but with the right kind of credit card perks, you might be able to prove the adage wrong. If you want to learn more about your credit card options, be sure to check out our infographic, “Credit Card 101: What You Need to Know.”