Control inflation with 5 credit card benefits | personal finance

melissa lambarena

As the prices of goods and services continue to rise due to inflation, cutting expenses isn’t the only way to free up cash to cover essentials.

Credit cards can offer valuable benefits to new applicants, whether your goal is to pay down debt or save costs. Even if you already have a card, there may be specific offers, rewards or benefits that could make a difference.

Here are some ways to maximize the value of a credit card.

1. Introductory offers

If you have good credit (a FICO score of 690 or higher) and a big expense looms, consider financing it with a credit card that offers a 0% introductory APR on purchases and a sign-up bonus. As long as you pay off the balance, you’ll save on interest charges and possibly recoup some of the cost of the purchase with that bond.

If you have good credit but want to pay off existing debt, a balance transfer credit card can lower costs. It allows you to transfer high-interest debt from another issuer and pay it off at a lower interest rate, ideally 0% APR over a period of time.

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“There’s going to be a [balance transfer] fee, so you have to shop around a lot,” says Melissa Cox, a certified financial planner and advisor at Fetterman Investments, a Dallas-based financial planning firm.

Aim for a fee of 3% of the transferred balance or less. Compare that fee to the cost of long-term interest payments on your current card to determine which option saves the most money. If the balance transfer makes sense, make a plan for it.

“If you know the transfer will be six months before interest starts, you’ll want to have a plan to pay off most of that debt in those six months,” says Cox.

You can usually find promotional periods for balance transfers that last less than two years. And you may not need to apply for a new credit card to get that deal; Some card issuers offer specific balance transfer offers to existing cardholders.

2. Buy Now, Pay Later Options

Some major issuers have built-in “buy now, pay later” options on their credit cards that allow you to pay for eligible purchases in installments for a flat fee or interest rate.

The predictability of these types of payments can make them easier to budget for, and such plans could save you money if their fee or interest rate is cheaper than your card’s normal APR. The plans don’t require a credit check, and you can usually still earn rewards on purchases if the card offers them.

3. Rewards for purchases

A credit card that offers a 2% rewards rate on all purchases, or 3% or more on specific categories, can help ease the pain of price gouging.

For example, let’s say you spend $500 a month at the grocery store. A credit card that earns 5% back on groceries could set you back $25 in rewards each billing cycle. Over the course of a year, that adds up.

If your current credit card doesn’t offer rewards for common spending categories like gas, dining out or shopping, consider one that better aligns with your spending.

4. Specific discounts for merchants

Some major credit card issuers offer discounts or rebates when you use a credit card to shop with specific merchants in categories like everyday purchases, gifts, and travel. These unique offers can be found in your account or email, and you usually have to “activate” them or add them to your card.

You’ll get more value if the eligible credit card also earns rewards on the purchase.

5. Benefits

Money-saving perks like cell phone insurance can be in your wallet. You can get coverage for damaged or stolen devices up to a maximum amount when you use cards with this benefit to pay your monthly bill. There is usually a small deductible and terms generally apply.

For Tony Florida, the primary account holder on his family cell phone plan, the savings from his credit card’s cell phone protection benefit add up. If you were paying your cell phone provider for the protection, it could cost you $14 or more per device per month. Cell phone repairs can also be expensive. When her sister dropped her phone and broke it, she filed a claim using her card benefit, paid the deductible, and was reimbursed.

“They just gave me a statement credit for the estimated cost of the phone,” says Florida, who is also a content creator for the Thrifty Tony YouTube channel. “It was like more than $500 that they reimbursed us.”

The claims process is a bit complicated, according to Florida, but he says it’s still worth it since he’s not paying extra money for this benefit.

If your card doesn’t have this benefit, it may have others. For example, you can have price protection, which reimburses the price difference of an item that is advertised at a lower price elsewhere. To find out what benefits your credit card offers, contact your issuer or log in to your account.

This article was written by NerdWallet and originally published by The Associated Press.

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