Most consumers have the notion that credit cards are for shopping with occasional rewards. The truth is most are not aware and miss out on benefits worth thousands of dirhams, perks and privileges each year they are entitled to.
Benefits can vary by card type - even from the same issuer - so check the terms and conditions, exclusions and limitations that may apply. Not to worry, all cards do offer a minimum range of benefits that you can take advantage of.
The best way to reap them is to first understand what you have and what you need. Firstly, stack up all the card(s) - in an Excel sheet, jot down what they offer, the annual interest charges , fees, credit limits and the available balance. Based on your needs, set a goal of what you would like to earn from the cards or apply for those that tick the right boxes.
Dig up and (finally) read that agreement you signed when you took out the card; or simpler, call the 24-hour toll-free customer care, found on the back of your card. Here's how to make the most of the benefits that credit cards offer. It is time to make that plastic fantastic!
- Reward Benefits
Every time you use a credit card, online or in the store, the bank earns an 'interchange' fee from the retail outlet (merchant). So, banks offer a little reward i.e. points as an incentive to encourage you to spend more or for your patronage. It's a win-win for all. Most rewards fall into one of few categories: cash, points, vouchers or miles that you can use for a variety of things. Cash rewards can reduce your card balance. Travel rewards earn free trips. You can use rewards or vouchers to purchase gifts. If not used responsibly, you could end up with lot of rewards and debt. Getting rewards is one thing, availing them is another. Watch out for expiring rewards, point caps and minimum spends.
- Travel Benefits
Credit cards were created back in the 1950s for customers on the go, for the road as a convenient alternative to cash. If you are a frequent flyer or have a holiday planned, take advantage of the travel benefits that cards offer - from discounted (or even free) flight tickets, VIP lounge access (yes even for economy class tickets), roadside assistance, concierge service, checked airline baggage, travel insurance (in the case theft or accident it ensures some personal expenses are taken care of); car rental insurance, lost luggage protection and trip cancellation insurance to name a few. Many come inclusive when you make the travel purchases with the card. The best part is credit cards, work all over the world – wherever your journey takes you, so do your benefits.
- Shopping Benefits
Credit cards are a possibly shopper’s best friend if you let them become one. Whether you buy online, in store, over the phone, while travelling - a service or product, credit cards are built to protect the shopper i.e. you. If a company does not make good on what you paid for and won't give a money refund, your credit card company might - with a chargeback. Cards also offer extended return (exchange) policies, extended warranty, and price protection, so you are covered. For example, with the ‘purchase protection’ you can reimburse items that are damaged, lost, need repairs, or stolen or loss caused to purchases done by using your credit card. It will also secure you against online fraud, unauthorized transactions.
It is time to turn your card into a shopping assistant.
- Banking Benefits
Using your credit card then paying it in full responsibly on time, means you get a 30-days interest-free loan. Money for nothing? Instead, most customers make impulsive purchases, pay only the minimum charges and rack up high monthly interests and charges.
Unused credit on your card is technically excess cash in your bank account. You can avail ‘flexible instalment loans’ and choose a payment plan that works for you. You can also take a ‘cash loan on card’ and maximize your credit limit for emergencies, where cash is the only way. If you need to pay for a ‘big ticket’, pay small i.e. convert the transaction into installments to repay over time. Ask your bank, if they offer interest-free instalment schemes with retailers/malls and plan your shopping.
Similarly, if you are juggling cards and want to simplify – use ‘balance consolidation’ and choose repayment options, with lower interest rates and smaller installments.
- Safety benefits
Unlike cash purchases, credit cards offer the best shield against fraud, theft and give complete control. Most credit cards offer instant alerting service by SMS, email and occasionally calls so you can keep a tab. They offer 3D Secure, embedded chip, PIN, making it the safest way to pay – online or offline. For lost cards, they offer zero liability i.e. you are covered if the card is misused.
They also include great options such as ‘Credit Shield’ that provides protection against unforeseen circumstances such as death, critical illness, injury, job loss and can pay the outstanding balance. It is like a small, negligible insurance amount for your credit card bill.
With a host of benefits, it is time to get more value from your credit cards than you thought possible.
Content exclusive to Citi by Wealth Monitor. The views expressed here are those of the authors and do not necessarily represent or reflect the views of Citibank UAE.