4 THINGS THAT SHOULD ALWAYS GO ON YOUR CREDIT CARD
Credit cards win lots of points when it comes to convenience. For some things they are essential, for other things, there are so many benefits that you just wouldn’t pay any other way. Following are the 4 things that Sherpa says should always go on your credit card.
1. Car rentals
Renting a car is pretty difficult without a credit card. Many rental car companies simply won’t do it any other way. For rental companies, a credit card helps them identify you. But there are a number of practical advantages.
Rental car companies will generally charge a deposit to your card. This is just a reservation of the amount so it doesn’t show up as a charge, but it can affect the amount of your credit limit that you can spend. They can’t do this with a debit or EFTPOS card.
Your credit card insurance may also cover things like the excess on the insurance cover provided with the car for accident damage. Rental car companies make money by charging a lot for extras such as insurance called Collision Damage Waiver (CDW). This can really add up for long rentals. If your card covers this, it can save a lot of money. Check with your card issuer.
When traveling, it’s comforting to know that your hotel room will be there if you arrive late. Most hotels will hold the room for you if you give them your credit card number. They will only charge the card with a cancellation fee (often the first night’s accommodation) if you don’t turn up. This can’t be done with a debit or EFTPOS card.
Paying for travel, particularly flights with a credit card has a number of advantages. It gives you protection against the airline or tour company going out of business between your booking and when you actually travel. If this happens you can generally get a refund form the credit card issuer. If you had paid cash you would become a creditor and have to get in line with the other creditors of the travel company.
Many credit cards include travel insurance if you pay for your flights and a certain portion of the total trip costs on credit card. This can be invaluable saving time and money compared to separate travel insurance.
Beware of credit charge surcharges. Airlines are one of the biggest offenders in imposing whopping credit card surcharges. Sometimes these are levied per flight or per sector and per passenger so can really add up. Make sure these charges don’t outweigh the other benefits.
Online shopping is the natural home of the credit card offering convenience and security. Where a transaction is processed to your card that you haven’t approved or is fraudulent, you have the right to have the transaction reversed by your card issuer. This is known as a chargeback and may also apply to some debit card transactions. A number of card issuers have introduced a Zero Liability feature which provides additional security.
If you use PayPal and link your credit card to your PayPal account, you get to double dip. PayPal provides buyer protection as part of its service and then you get the protective benefits of using your credit card. Remember, this is not meant to deal with disputes between you and the merchant, for example, if you think the goods are substandard.
For these transactions, your credit card offers significant advantages over cash, cheque
or debit cards. But if you think you won’t pay off your credit card bill in
full on the due date, then consider those charges and costs and factor them in
to your Budget Plan.
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Vince Scully | LifeSherpa
With over 25 years in Financial Services from consulting to management, Vince Scully is the go-to guy for wealth management and financial advice. Before creating LifeSherpa, Vince founded the Calliva Group; a fund manager, product issuer, adviser and lender. Vince is an adviser to the Wealth Management Industry, and prior to his role as CEO at Calliva, a senior member of Macquarie Bank’s infrastructure team.