I Could Have Avoided Losing Over $4,000 If I’d Just Done This One Thing

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Recently, a friend and I both went through separate situations where we became victims of scams and theft. We lost a combined total of almost $4,000. Neither situation had a happy ending. Still, we each learned a lesson that's important to share. Credit cards could have solved our problems in either circumstance.

As a credit expert by trade, I'll be the first to warn that credit card debt is bad for you. Yet, I'm also quick to point out that credit cards themselves aren't the problem. When you use credit cards responsibly, they provide benefits you miss out on with other forms of payment.

Personally, I have a dozen credit cards. Although I didn't need 12 cards to earn great credit scores, the accounts haven't held me back in that department. Perhaps the biggest perk credit cards give me is something that many people overlook. When I make purchases with a credit card, it can protect me and my money from people with bad intentions.

The Baseball Team That Never Was

The spring before the COVID pandemic, my husband and I signed our son up for a travel baseball team. The fees for the season totaled $950. The organization required payment upfront, and they didn't accept credit cards.

As people who pay for almost everything with a credit card (give us all the rewards!), the requirement gave us pause. But, against our better judgment, we paid the sport's fee via check.

Practices for the baseball team began as scheduled, but we soon learned there weren't enough players to form a full baseball team. We were told, "More players are trying out and will join soon." Yet, a few weeks passed and the numbers didn't grow.

Shortly thereafter, the organization closed. All future practices and games were canceled. We were promised a refund, but when we followed up, we only received excuses. Soon the "call me back tomorrow" responses turned into no answer at all. It was clear we weren't getting our money back.

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The Case of the Stolen Cash

Around the same time as the baseball debacle, my friend (who we'll call Nancy for the sake of privacy) had an unfortunate situation that cost her $3,000. Nancy saved for a year and took her family on a Walt Disney World vacation using an all-cash budget. On the first day of their trip, someone stole Nancy's wallet and her entire $3,000 vacation fund along with it.

Nancy reported the theft, but there was no way to get back the missing cash. She requested a new debit card from her bank and it was overnighted to her home address. A friend then overnighted the debit card to Nancy in Florida. The family followed a strict budget and borrowed $1,500 for food and travel expenses from another savings account rather than cancel their trip. The $3,000 in stolen cash was never recovered.

Advantages of Credit Cards

Both scenarios above could have been less horrible if Nancy or I had used a credit card. In the case of the baseball fiasco, there was no easy way, outside of a courtroom, to try to recuperate our losses when services weren't delivered as promised. Because we paid with a check, we couldn't dispute the charge with our bank.

Of course, a company doesn't have to honor my request to pay with a credit card. But, if my request is refused, I can always take my business elsewhere.

Had I insisted on paying with a credit card, I would have had the option to dispute the charge under the Fair Credit Billing Act (FCBA). Per the FCBA, if you use a credit card you have 60 days to dispute a transaction when a merchant fails to perform the services it promised. If my credit card company's investigation had ended in my favor, I would have gotten the $950 back.

In Nancy's situation, if her stolen wallet held a credit card instead of a pile of cash, she wouldn't have lost her money. She could have called her card issuer, reported the card as stolen, and requested a replacement. The FCBA would have protected her from liability for any unauthorized charges. In fact, if Nancy carried certain American Express cards, she might have been issued a new card number right away that would work through her digital wallet.

In addition to fraud protections, the best credit cards offer both travel and purchasing benefits.

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Purchase Protection

Purchase protection covers eligible purchases in the event of theft, accidental damage and sometimes loss. It's usually limited to the first few months after you make a covered purchase with your card.

Some notable cards that offer purchase protection include:

American Express® Gold Card

Learn MoreRates & Fees

• Our Rating 4.5/5 How our ratings work
• APRSee Pay Over Time APR
• Annual Fee$0
• Welcome Bonus 60,000Membership Rewards Points More Info

  bonus_miles_full Dollar Equivalent: $1,140 (60,000 Membership Rewards Points * .019 base)

This card is a foodie’s dream—you'll earn outsized rewards at U.S. supermarkets and restaurants worldwide and get dining credits with select merchants. No foreign transaction fees and others credits make this card ideal for travelers, too. Plus, people who can take advantage of the annual statement credits may easily offset the annual fee. Enrollment is required for select benefits and terms apply.

• Overview
• Pros & Cons

Overview

Thanks to its generous rewards and attractive benefits, the American Express® Gold Card is a very popular rewards card. While most credit cards these days target frequent travelers, this card offers practical benefits that come in handy in your everyday life as well as your travels.

Pros

• Earns valuable Membership Rewards points
• A valuable card for food, including at U.S. supermarkets and restaurants worldwide
• An array of credits that help offset the card's annual fee

Cons

• Use it or lose it credits
• Perks are not for everyone

Chase Sapphire Preferred®

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Secure application on issuer’s website

• Our Rating 5/5 How our ratings work
• APR20.99% - 27.99% (Variable)
• Annual Fee$95
• Sign Up Bonus 60,000Chase Ultimate Rewards Points More Info

  Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. Dollar Equivalent: $1,320 (60,000 Chase Ultimate Rewards Points * 0.022 base)

The Chase Sapphire Preferred Card is one of the gold standards for earning travel rewards. It has a generous sign-up bonus and you can earn points on travel and dining expenses. The card does have an annual fee, but you can continue earning points through bonus categories and an anniversary points boost.

• Overview
• Pros & Cons

Overview

The Chase Sapphire Preferred is pretty flexible as it lets you transfer rewards points into miles or points several airlines and hotel programs. You can take advantage of strong transfer partners such as United, Southwest, Singapore Airlines, Virgin Atlantic and Hyatt. Similarly, you can book any reservation you want through the Chase Travel℠ portal. Although the card might not be ideal for the most frequent travelers, it has a built-in upgrade path, so when it’s time to level up your travel rewards game, you won’t have to start from scratch.

Pros

• Points are easily transferable to airlines and hotel partners
• Accelerated earnings on dining, travel & household purchases
• Excellent travel and purchase protections
• No foreign transaction fees

Cons

• Not ideal for the highest spenders
• $95 annual fee

Ink Business Cash® Credit Card

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Secure application on issuer’s website

• Our Rating 4.5/5 How our ratings work
• APR17.99% - 23.99% (Variable)
• Annual Fee$0
• Sign-Up Bonus $750Cash Bonus More Info

  Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening.

Business owners looking to earn a high rate of cash back on common business expenses like office supplies and internet could get a lot of value from this card. The trade-off for the high cash-back rate, though, is a lower spend cap than you’ll find with other Ink Business cards.

• Overview
• Pros & Cons

Overview

The Ink Business Cash® is legendary for its offer of 5% cash back for purchases at office supply stores and on many telecommunications services, with no annual fee. And while 5% cash back sounds great, these rewards can be much more valuable when paired with another Chase credit card that allows transfers to airline miles or hotel points. In addition to earning excellent cash-back rewards, it also includes competitive introductory offers and provides cards for employees at no additional charge.

Pros

• No annual fee
• 5x back on a broad array of business spending categories
• Robust travel and purchase protections
• Don't need a full-fledged business to apply

Cons

• Businesses that don't spend on the category bonuses won't benefit

Travel Protection

When you use a credit card to pay for travel expenses, travel protection benefits could kick in if your trip doesn't go as planned. From travel delay reimbursement to trip cancellation coverage, the right travel credit card could protect you in a big way.

If you're looking for a credit card with travel protection benefits, you might consider one of the following:

• Chase Sapphire Reserve®
• Bank of America® Premium Rewards® credit card
• The Platinum Card® from American Express

Bottomline

Are you worried about racking up debt or paying expensive interest fees? As long as you manage your account wisely (e.g., you pay on time and in full every month), you can take advantage of credit card benefits without wasting money on interest fees.

Credit cards are the clear winner when it comes to protecting your hard-earned money. Cash, checks and even debit cards simply don't offer you the same robust protections that credit cards do.