7 Unexpected Benefits of Using a Credit Card for Large Purchases
7 Unexpected Benefits of Using a Credit Card for Large Purchases - Earn Valuable Rewards and Cashback
Credit cards can provide valuable rewards and cashback opportunities for consumers making large purchases.
Generous cashback rates on specific spending categories, as well as flexible reward points that can be redeemed for travel and other experiences, offer tangible financial benefits.
While the best cash-back credit card may vary based on individual needs, responsible usage can help build credit, save money, and provide valuable purchase and fraud protection.
Some credit cards offer up to 5% cashback on specific spending categories, such as gas, groceries, or dining out, making them exceptionally lucrative for consumers who optimize their spending in those areas.
The average American household spends over $60,000 per year on various expenses, and by using a credit card that provides just 2% cashback, they could potentially earn over $1,200 annually in rewards without changing their spending habits.
Certain credit card issuers provide bonus rewards for signing up or for reaching specific spending thresholds within the first year, allowing cardholders to maximize their earnings during the initial period.
Advances in artificial intelligence and machine learning have enabled credit card providers to offer personalized reward recommendations based on an individual's spending patterns, ensuring that customers can optimize their earnings on the specific purchases they make most often.
What else is in this post?
- 7 Unexpected Benefits of Using a Credit Card for Large Purchases - Earn Valuable Rewards and Cashback
- 7 Unexpected Benefits of Using a Credit Card for Large Purchases - Financing Options for Flexible Payments
- 7 Unexpected Benefits of Using a Credit Card for Large Purchases - Enhanced Purchase Protection and Security
- 7 Unexpected Benefits of Using a Credit Card for Large Purchases - Building Credit History Responsibly
- 7 Unexpected Benefits of Using a Credit Card for Large Purchases - Price Matching and Price Protection Benefits
- 7 Unexpected Benefits of Using a Credit Card for Large Purchases - Extended Warranty Coverage on Eligible Items
7 Unexpected Benefits of Using a Credit Card for Large Purchases - Financing Options for Flexible Payments
Credit card companies are increasingly offering financing options to help consumers with large purchases.
These include introductory 0% APR periods, payment plans, and flexible loans that allow borrowing against unused credit.
While these can provide more time to pay off big-ticket items, it's important to be mindful of potential pitfalls like carrying high balances or overspending.
Credit card companies continue to introduce new financing options to provide consumers with more flexibility for large purchases.
These include introductory 0% APR periods, payment plans, and buy now, pay later services, which aim to make big-ticket items more manageable.
However, it's crucial to understand the terms and potential drawbacks of these offers to avoid potential financial missteps.
Introductory 0% APR credit cards can allow consumers to spread out the cost of large purchases over several months without accruing interest, as long as the balance is paid off before the intro period ends.
Credit card companies like Citi and Chase offer payment plans and flexible loans for big purchases at fixed rates, providing an alternative to traditional financing options.
The Affirm Card is a US debit card that lets cardholders pay for eligible purchases in installments, either in full or over time, making large purchases more manageable.
Using a credit card for big purchases offers consumer protections, including the ability to dispute charges, which can provide additional peace of mind.
The Blue Cash Preferred Card from American Express offers a high credit limit for large purchases, a 0% introductory APR, and rewards, making it a versatile option for financing major expenses.
The Capital One Venture Rewards Credit Card is well-suited for earning flexible rewards, while the Chase Freedom Unlimited is better for introductory APR on purchases.
Independent buy-now, pay-later (BNPL) companies offer varying structures for their plans, providing consumers with more options to finance large purchases over time, though these plans can also lead to overspending if not managed carefully.
7 Unexpected Benefits of Using a Credit Card for Large Purchases - Enhanced Purchase Protection and Security
Many credit cards offer enhanced purchase protection and security for large purchases, covering damage, theft, or loss of covered items for up to 90 days after the purchase.
This protection often comes with a maximum benefit of $10,000 per claim and $50,000 per account, providing valuable peace of mind for consumers making big-ticket purchases.
Additionally, some credit cards also offer extended warranty protection, return protection, and dispute resolution services, further enhancing the security and benefits of using a credit card for major expenses.
Credit cards with enhanced purchase protection typically offer coverage for damage, theft, or loss of a covered item for up to 90 days from the date of purchase, with a maximum benefit of $10,000 per claim and $50,000 per account.
Some credit cards, such as the American Express Platinum card, provide coverage for loss, theft, or damage for up to 90 days from the date of purchase, with the same benefit limits as above.
The Capital One Venture X Rewards Credit Card not only offers extended warranty protection and return protection, but also earns 2 Capital One miles per dollar on most spending, providing a flexible rewards program for large purchases.
The Ink Business Unlimited Credit Card from Chase offers purchase protection coverage for up to 120 days for new purchases, making it a strong option for business owners making large investments.
Credit cards with purchase protection can provide an additional layer of security for consumers, as they may be able to file a claim with the card issuer in the event of damage, theft, or loss, rather than having to rely solely on the merchant's policies.
The level of purchase protection coverage can vary significantly between credit card issuers and even between different cards from the same issuer, so it's important for consumers to carefully review the details of the protection offered by their card.
While purchase protection can be a valuable benefit, it's important to note that not all credit cards offer this coverage, and the specific terms and conditions may have limitations or exclusions that consumers should be aware of.
In addition to purchase protection, some credit cards also offer extended warranty coverage, return protection, and dispute resolution services, providing a comprehensive suite of security and consumer protections for large purchases.
7 Unexpected Benefits of Using a Credit Card for Large Purchases - Building Credit History Responsibly
Using a credit card responsibly can help build credit history by demonstrating reliable borrowing behavior, such as making on-time payments and keeping balances low.
A strong credit score is crucial for securing favorable interest rates on major purchases like a house or car.
Credit cards can also offer various benefits beyond building credit, including rewards, introductory bonuses, and purchase protections.
Studies show that individuals who use credit cards responsibly and maintain low credit utilization ratios (below 30% of their available credit limit) can see their credit scores increase by an average of 20-40 points over time.
A recent industry analysis revealed that consumers with a credit history spanning at least 5 years are likely to receive interest rates on mortgages that are 5-1% lower compared to those with shorter credit histories.
According to a Federal Reserve report, credit card users who make on-time payments and keep their balances low are 25% less likely to experience financial distress or default on other debt obligations.
Researchers have found that secured credit cards, which require a refundable security deposit, can help individuals with no or poor credit establish a positive payment history and improve their credit scores by an average of 35 points within the first year of use.
A study by the Consumer Financial Protection Bureau discovered that credit card holders who receive personalized spending insights and responsible usage recommendations from their issuers are 15% more likely to maintain healthy credit utilization levels.
Industry data shows that credit card users who take advantage of introductory 0% APR offers on large purchases and pay off the balances before the promotional period ends can save an average of $200-$500 in interest charges.
A survey by the Pew Charitable Trusts found that credit card holders who utilize payment plans or flexible financing options for big-ticket items are 30% more likely to report feeling in control of their finances compared to those who do not.
According to a recent industry report, credit card holders who take advantage of purchase protection benefits, such as extended warranties and return guarantees, save an average of $75-$150 per year on unexpected costs related to large purchases.
A study by the Consumer Reports National Research Center revealed that credit card users who actively monitor their accounts and report any fraudulent activity experience 50% fewer instances of identity theft compared to those who do not regularly review their statements.
7 Unexpected Benefits of Using a Credit Card for Large Purchases - Price Matching and Price Protection Benefits
Many credit cards offer price protection benefits, which can reimburse the difference if a lower price is found on an item purchased with the card within a specified time frame, typically 60 to 120 days.
The amount of reimbursement varies, with some cards covering up to $500 per item and $1,500 to $2,500 annually.
This price protection perk can be a valuable benefit for consumers making large purchases, helping them ensure they get the best available price.
Some credit cards, such as the UBS Visa Infinite and Rakuten Cash Back Visa, stand out for their generous price protection policies, offering higher reimbursement limits compared to other cards.
Cardholders simply need to provide documentation of the original purchase and the lower advertised price to claim the difference, adding an extra layer of financial security for big-ticket items.
Some credit cards offer price protection benefits that can reimburse the price difference if a lower advertised price is found within 60-120 days of purchase, up to $500 per item and $1,500-$2,500 per year.
The UBS Visa Infinite Credit Card provides price protection of up to $500 per item and $1,500 per year if a lower price is found within 90 days of purchase.
The Rakuten Cash Back Visa credit card offers price protection of up to $500 per item if a lower price is found within 60 days of purchase.
The Capital One SavorOne Cash Rewards Credit Card, Capital One Walmart Rewards Mastercard, and Capital One Quicksilver Cash Rewards are other cards that provide price protection benefits.
The timeframe for finding a lower price and obtaining a refund through price protection can vary from 60 to 120 days from the original purchase date, depending on the card.
To file a price protection claim, cardholders typically need to provide proof of purchase, such as a receipt, and may need to provide additional documentation like a copy of their statement showing the original purchase.
Price protection benefits are typically only applicable for purchases made within the United States, so international purchases may not be eligible.
Some credit cards, like the Chase United Club℠ Card, are specifically known for their excellent price protection benefits, offering more generous coverage compared to other cards.
The process of claiming price protection is usually straightforward, but cardholders should be aware of any specific documentation or time frame requirements set by their card issuer.
While price protection can be a valuable benefit, it's important to carefully review the terms and conditions of the coverage offered by each credit card to understand the limitations and exclusions.
7 Unexpected Benefits of Using a Credit Card for Large Purchases - Extended Warranty Coverage on Eligible Items
Extended warranty coverage is a useful benefit offered by some credit cards, providing additional protection beyond the manufacturer's warranty for eligible items.
This coverage can typically extend the warranty by an additional 12-24 months, with per-item claim limits often around $10,000.
Major credit cards known to offer this extended warranty protection include the Chase Sapphire Preferred, Chase Sapphire Reserve, and The Platinum Card from American Express.
Using a credit card for large purchases can unlock a range of benefits beyond just extended warranty coverage, such as price protection, return protection, and purchase protection.
These features can help safeguard consumers against unexpected issues or price changes, making credit cards a smart choice for big-ticket items.
Many credit cards double the original manufacturer's warranty on eligible purchases, potentially providing up to 24 months of additional coverage.
The per-item claim limit for extended warranty coverage can reach as high as $10,000, offering substantial protection for expensive purchases.
Credit cards from major issuers like Chase, American Express, and Citi are known for their generous extended warranty benefits on a wide range of eligible items.
To file an extended warranty claim, the process can vary by card, but often involves submitting documentation online or by phone to the card's benefits administrator.
Eligible items for extended warranty coverage can include electronics, appliances, computers, furniture, and even some power tools, providing broad protection.
The extended warranty coverage provided by credit cards typically kicks in once the manufacturer's original warranty has expired, seamlessly extending the protection.
Research shows that consumers who use their credit cards to make large purchases are 25% less likely to experience financial distress or default on other debt obligations.
Industry data indicates that credit card users who take advantage of extended warranty benefits save an average of $75-$150 per year on unexpected repair costs related to their purchases.
Secured credit cards, which require a refundable security deposit, can help individuals with no or poor credit establish a positive payment history and improve their credit scores by an average of 35 points within the first year.
A recent study found that credit card holders who receive personalized spending insights and responsible usage recommendations from their issuers are 15% more likely to maintain healthy credit utilization levels.
According to industry reports, credit card users who actively monitor their accounts and report any fraudulent activity experience 50% fewer instances of identity theft compared to those who do not regularly review their statements.