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Credit cards offer safeguards, perks, but use them wisely

April 3rd, 2006

Credit cards offer safeguards, perks, but use them wisely

Permit me, if you will, a somewhat odd analogy about credit cards.

I’ve decided that those little plastic cards in your wallet are a lot like the infamous junkyard dog. They can protect you from problems you haven’t even thought of yet. But if you turn your back on them, or let them get out of hand, they’ll take a major hunk out of your hide and make you wish you’d never brought them home.

I thought about this last week when American Express paid to repair the monitor on a notebook computer we bought for Christmas. We’d had it for less than a month when it took a tumble and the screen was damaged. advertisement

My first thought was about how much it was going to cost to repair. Then my wife reminded me of the American Express Purchase Protection Plan. For 90 days after purchase it covers items that are damaged or stolen. The computer definitely qualified.

The claim process required the usual paperwork, but it wasn’t outrageous. I shipped the computer off to get repaired and then sent the bill off to American ExpressThe total cost to fix the screen was $513. The protection plan paid every dollar.

Just as I nearly forgot about the protection plan, there are plenty of other benefits your credit cards provide that you may not have considered. The most basic is that they protect you from merchants who do not deliver the goods or services as promised. You can file a dispute, and if the credit-card company finds in your favor, you don’t have to pay.

Some cards offer additional insurance covering items such as rental cars and trip cancellation. Others extend warranties and protect you in case your identity is stolen.

Of course, none of the extras are worth it if you can’t control your credit cards. Face it, the companies that issue them provide all that stuff only because they’re hoping to make a lot of money from you.

If you’re really good, you can find a no- or low-fee credit card and pay off the balance every month. That way you get all the protection without the pain. But whatever you do, keep them on a short leash and make sure they’re well cared for. A few missed payments and they’ll quickly turn on you. And suddenly that junkyard dog won’t seem like such a good idea after all.

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