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Credit card debt is a serious issue but if used correctly those credit card benefits can really work for us.

Think about it, assuming we pay our bills in full and on time then technically those benefits are form of payment that the credit card companies make to us. They may come in the form of travel rewards, cash back, store credit, one way or another it’s something that is offered to us for “free”.

Each card offers different benefits which may or may not matter to you, but it’s important to know what kind of benefits are offered so you don’t end up spending money on something you may already have coverage for.

Credit card advantages

Consumer Benefits

Extended warranty – Paying for extended warranty tends to be a waste of money but if you’re getting it for free, hey that’s a bonus. Typically the extended warranty gives you an extra year of protection which can be great for high-ticket items.

Price Protection – You won’t need to worry about the merchant price protection policy if your credit card includes this perk. Generally speaking if your card offers this benefit you’ll have 60 days from the date of purchase to make a claim. Not all items qualify for price protection so read your policy.

Roadside assistance – This is a great perk since you won’t need to purchase any roadside assistance on your own. If your car breaks down in Canada or the United States, you simply call your credit card’s customer service line for assistance. It’s worth finding out who actually provides the roadside assistance to ensure they have a big enough fleet to service your needs.

Rental car insurance – You really should always be declining insurance when renting a car; between your auto insurance and credit card there’s a good chance you have more than enough coverage already. The credit card insurance will cover any damages that happen to the car, but it does not cover any personal injury so make sure you have medical insurance.

Make it rain

Cash back – This probably the most popular credit card benefits, certain cards will offer you anywhere from 1-4% cash back when making purchases. Many of the cards offer increased cash back on gas and groceries up to a certain amount so know your thresholds. E.g. if you only get extra cash back on the first $5000 spent, then once you hit that spending amount, it’s probably better to start using a different card.

Loyalty points – Many retailers have recently introduced their own credit cards which give you loyalty points that can be spent in store. This is basically another form of cash back, but will restrict you to claiming those points at that specific merchant. This could be a good thing if you’re a frequent shopper and the card offers you extra points.

Travel benefits

No foreign exchange fee – This is a rare perk but it should not be underestimated. Generally speaking credit cards charge an extra 2.5% on top of the spot rate whenever you make a purchase in a foreign currency. Why pay that extra fee when you don’t have to? Honestly it’s worth picking up a no forex fee card even if you use it only when you travel.

Travel medical insurance – Health care outside of Canada can cost a small fortune so having travel medical insurance is a must; fortunately this is a standard feature for just about every travel rewards credit card. You may still need to purchase additional insurance so be sure to read the fine details of your insurance benefits. Insurance can add up so it’s no surprise that travel insurance is a popular credit card benefit.

Trip cancellation / interruption insurance – Emergencies happen and having trip cancellation will help you recoup costs in the event you do need to cancel or rebook. Trip interruption insurance can be tricky at times since not all insurance companies define “interruption” the same. Again, check your policy.

Baggage insurance – This is a benefit that many people ignore but is incredibly handy if you ever need to use it. Your luggage doesn’t even need to be lost; the policy usually kicks in if your baggage is delayed for a few hours, which is much better than the airline policies.

Final thoughts

Credit card benefits are useless if you’re carrying a balance every month. Paying your bill in full and on time every month is much more important than any benefits you could possibly get.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

19 Comments

  1. Avatar Emily @ Simple Cheap Mom on February 5, 2015 at 5:28 PM

    We put everything we can on our credit card (then pay it off each month). The rewards are great, but it’s the added purchase protection and such that really makes it a good choice for us.

    • Avatar Barry Choi on February 5, 2015 at 6:01 PM

      Emily,

      The extra insurance is what appeals to me. My employer gives me travel insurance but getting trip interruption/cancellation and lost luggage is an added bonus.

  2. Avatar Our Big Fat Wallet on February 5, 2015 at 8:37 PM

    I just got the Capital One Aspire Travel World card and I’m looking forward to using it. Anyone can earn a decent return every year if they choose their cards wisely. It’s also worth checking out a card like the Amazon Visa that waives the foreign exchange currency conversion cost. Of course, this is all useless if you carry a balance on the card and end up paying interest at a sky-high rate

    • Avatar Barry Choi on February 5, 2015 at 8:40 PM

      Dan,

      Ha yes all the benefits in the world are useless if you’re making minimum payments.

  3. Avatar Virna on February 5, 2015 at 10:55 PM

    I use the Capital One Aspire MC and pay it off every month. I also recently applied for the Marriott credit card and received a free hotel stay for being approved.

    • Avatar Barry Choi on February 5, 2015 at 11:00 PM

      Virna,

      Added bonus with the Marriott card is that I believe it’s got no forex fees. Good choice!

  4. Avatar Virna on February 6, 2015 at 5:14 PM

    Yes, no foreign currency conversion charge which is a great bonus. I was going to get the Amazon card but the free hotel stay made me go with the Marriott card.

    • Avatar Barry Choi on February 6, 2015 at 6:07 PM

      Virna,

      Note that the Marriott card has a yearly fee whereas the Amazon Visa doesn’t. Just something to think about.

  5. I’m not a big fan of fancy travel rewards credit card. I prefer my plain vanilla MBNA SmartCash Mastercard. 2% cashback and groceries and gas and 1% on everything else really adds up. It’s great there isn’t an annual fee either!

    • Avatar Barry Choi on February 6, 2015 at 6:08 PM

      Sean,

      You should think about switching to the Scotiabank Momentum Visa. It gives 4% cash back on groceries and gas.

  6. Avatar breakingthebanks on February 7, 2015 at 6:02 PM

    I’m a big fan of my PC Mastercard. I collect points on every purchase I make, and once I have $100 in points I stock up on long-lasting essentials (like toilet paper, flour, porridge oats) for free! Since I earn points from purchases I would make anyway, this card can be a huge help.

    • Avatar Barry Choi on February 7, 2015 at 6:04 PM

      Breaking The Banks,

      I picked up the PC Mastercard a few months back and use it whenever I’m at No Frills. I wish the bonus PC Points was a bit easier to handle. Why do I need to load things every week?

  7. Avatar Christine on February 9, 2015 at 3:16 PM

    Hey Barry, I’m in the market for a new credit card and have been going through your past posts – lots of great info. I signed up for the Amazon.ca Rewards card for my travels. Can’t believe I’ve never heard about it!

    • Avatar Barry Choi on February 9, 2015 at 3:25 PM

      Christine,

      It’s a must have card for travellers. In the long run you’ll save tons. As for your daily credit card use, you need to figure out your priorities first e.g. cash back, travel rewards.

  8. Avatar troy on August 1, 2015 at 9:27 AM

    Its just too bad we dont have a card in Canada that will waive the 2.5% forex fee plus provide comprehensive travel insurance!?

    • Avatar Barry Choi on August 1, 2015 at 10:05 AM

      Troy,

      You would need a combination of 2 cards for that. The Amazon.ca visa from Chase is forex free and just about any travel rewards card will give you the insurance you need.

  9. Avatar troy on August 1, 2015 at 11:04 AM

    Thank you. Yes, I do indeed have the Amazon.ca card and other travel cards, but the bummer is when paying for condo rentals in US funds which means I also pay the 2.5% forex fee if I use the other card for insurance purposes!!

    • Avatar Barry Choi on August 1, 2015 at 11:16 AM

      Yes that can be a pain since some credit cards require you to do all your travel booking with your credit card. It might be worth checking the fine print, travel medical might apply even if you don’t book your trip on the card.

  10. Weekend Reading - Tawcan on April 23, 2018 at 10:50 PM

    […] at Money We Have shared common credit card benefits. Since we pay our credit card balance in full every month, I am all for taking advantage of credit […]

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