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Learn about your Credit Card’s Features and Save

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Often times we find ourselves so concerned about our credit card’s terms and conditions that we fail to recognize that our cards carry some great features that can help us save money, manage our money and protect our purchases.

Although it certainly is important to thoroughly read our credit card’s terms and conditions so that we understand such things as our APR, our monthly due dates, cash advance fees, credit limit and the like, we should also take the time to read all of the features that so many creditors offer with their cards.

So many consumers fail to read and understand their credit card’s features, which means that many of us are losing out on some great perks and features. In other words, take a second look at your cardholder agreement to learn about your credit card’s benefits:

• Proof of purchase – Perhaps one of the best features of your credit card is your monthly statement. Sounds weird, doesn’t it? But it’s true! Your monthly statement is a clear proof of purchase for any expenditure, so if you need a run-down of expenses for your business, for your taxes or simply for your own records, your credit card statement does the trick. Plus, it can also serve as a receipt for a purchase if you misplaced your original store receipt. The bottom line is: hang on to your monthly credit card statement – you never know when it will come in handy!
• Purchase protection coverage – Many cards now offer purchase protection coverage, which essentially protects you from damaged or defective goods when purchased on your credit card. Your creditor can actually go after the retailer in question to get you a refund on a defective or faulty purchase.
• Car insurance rental coverage – Did you know that if you pay for a rental car with your credit card that you may automatically have rental insurance coverage? Many creditors offer their cardholders insurance coverage for rental insurance companies; which means that you won’t have to purchase the costly insurance through the car rental company.

Credit Card Cash Advances: The Good, the Bad and the Ugly

Credit Card Debt

First, the good news: cash advances are a smart tool to have in your back pocket in an emergency situation. Now, the not-so-good news: cash advances come with upfront fees and high interest rates.

For example, you find yourself stranded out of town and in need of car repairs. Your short on cash and the repair shop doesn’t accept credit cards. What do you do?

If you are a credit card holder and you have access to an ATM, you may be able to use your credit card to get quick cash. Although the fees and the high interest rate are not in your favor, you recognize that the situation needs to be resolved.

In this instance, it is easy to see the advantages of using a credit card for a cash advance. However, many consumers have overused and abused credit card cash advances and have therefore found themselves in a mountain of unexpected credit card debt.

What you Need to Know:

• Cash advances have no grace period. In other words, you begin to accrue interest charges the moment you withdraw the money.
• The interest rate charged by credit card companies for cash advances is often much higher than the card holder’s interest rate for purchases. In fact, many credit card companies charge as much as 20 to 25 percent for a cash advance. Compare that with the typical 12 to 15 percent charged by most credit card companies for purchases and you can easily see how quickly the cost of cash advances can add up.
• Fees for cash advances can be outrageous, to say the least. Fees are generally calculated on a percentage of the cash advance taken (usually one to four percent), or are simply charged as a flat fee. Flat fees are not based on the amount of the cash advance and therefore remain consistent from one cash advance to the next.

It is also not uncommon for credit card companies to charge consumers both a flat fee, as well as a percentage of the cash advance taken. For example, the credit card company may choose to charge a flat fee of $10 for every cash advance, and then also charge a percentage of the cash advance itself.

• If you take a cash advance through an ATM, be prepared to also pay a fee charged by the financial institution that owns the ATM.