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Card perks come at a price

By Marcie Geffner · Bankrate.com
Friday, July 15, 2011
Posted: 3 pm ET

Everyone loves credit card perks.

While most card users are familiar with such popular benefits as airline miles, shopping points and cash rebates, many cards also offer other lesser-known benefits, as Dana Dratch explains in the Bankrate.com story, "Six hidden credit card perks." On the list of hidden benefits: price protection, vehicle roadside assistance, return protection, extended warranty, theft, breakage and loss protection, and travel benefits.

Price protection offers a refund of the difference if the consumer finds a lower price on a prior purchase. Roadside assistance fixes flat tires, provides towing services and the like. Extended warranties stretch out the manufacturers' protection on some products for a longer term. Theft, breakage and loss protection kicks in if a product gets ruined, stolen or lost soon after its purchase date. Examples of travel benefits include trip cancellation insurance, car rental insurance and payment for lost luggage.

Those perks are all well and good, though, as Dratch also explains, restrictions almost always apply. That tends to severely limit the situations in which the benefits can actually be utilized, just as program rules curtail whether consumers can actually take advantage of the airline miles, shopping points and so on that they've earned.

Moreover, consumers should keep in mind that while credit card perks might seem like freebies, they actually come at a cost for those who pay annual fees, interest and other charges to utilize the credit card that grants the benefits.

The fact is that credit card issuers offer perks to encourage people to get and use their credit cards. Cards do offer convenience and the ability to buy now and pay later. But the perks wouldn't be offered if they didn't achieve their objective: to entice more customers and higher credit card usage.

Consumers who handle credit well can use credit cards to great advantage, paying off the balance in full every month while still racking up the benefits and utilizing the other perks. But for those who have an excessive number of credit cards or owe more than they can afford to pay, all those perks might not be worth the cost.

Follow me on Twitter: @marciegeff

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2 Comments
Bob
July 18, 2011 at 12:30 am

Bank of America had me in a loan modification for a year then said I did not qualify and owe them $50,000.00. I have tapes where they say that making home loans affordable is not about lowering payments. No matter what number I told them I made after the denial there was nothing available to help me. I have them on tape that they sent denial letters to all the people that came to them from a previous loan servicer. It is incredibly frustrating that they have no accountability to anyone. I e-mailed Obama, but little surprise that no one responded. I would suggest that boycotts start. Move to other banks and refuse to do business with Bank of America.