Payment Card - Not Just for Paying
Payment cards, especially credit cards, come with useful and financially valuable perks beyond the basic payment function. Many users get a card solely for the perks, leaving the payment feature as a side note.
Card issuers base their business on offering high-interest credit and charging fees on transactions. For debit cards, monthly fees are also a significant source of revenue. Although credit features are heavily promoted, they are not worth using due to the high interest rates. To avoid unnecessary extra costs, always pay your statement by the due date.
The issuer also typically takes a percentage-based service fee on the value of transactions. The merchant usually bears the fee, so the cardholder does not need to worry about it. Even though merchants pay service fees for processing payments, electronic transfers are often far more convenient than accepting cash.
Debit Card, Charge Card, or Credit Card?
There are three main types of cards: debit, charge, and credit. Charge and credit cards often include more non-payment features than plain debit cards.
With a debit card, the payment is taken directly from the linked account. For this reason, using the card is safer than a charge card. Especially modern, growing fintech companies market debit cards that come with a range of add-on services beyond the account and payment function.
With a charge card, purchases are billed later on a statement. The bill must be paid no later than the due date. Billing typically does not add extra costs for the user.
A credit card is also a charge card, but you do not need to pay the full statement by the due date. You can carry a balance, but the interest on the credit is expensive. Many banks even offer no-monthly-fee credit cards with solid extras, so choosing a credit card can be worthwhile purely for the perks, even if you never use the credit.
Payment Card Benefits for Travelers
Most payment card perks relate in one way or another to travel.Travellerss use cards frequently, so they are attractetoth add-on services that make trips better.
Travel Insurance
The value of comprehensive travel insurance is about €100 per year. The policy usually covers at least medical expenses and sometimes baggage and delays. It is not advisable to travel abroad without travel insurance.
Many cards, even free ones, include travel insurance. For the insurance to be valid, the trip typically must be paid at least partly with the card. The terms of card-linked travel insurance are usually sufficient, but exact coverage varies. For example, limits may be lower and deductibles higher than those of standalone travel insurance. Card issuers partner with well-known insurance companies.
It is essential to understand the customer obligations for the travel insurance to remain valid. Also, review the coverage, limits, and deductibles carefully before departure.
Among others, Morrow Bank Mastercard includes complimentary travel insurance with its credit card.
Rental Car Insurance
Rental car insurance is a valuable perk for frequent renters. Rental cars almost always include comprehensive insurance in the price, but the deductible may be as high as €2,000. The card’s rental car insurance covers this deductible. The card’s rental car insurance may also have its own deductible, usually under €100—much lower than the rental company’s comprehensive insurance deductible.
Bank Norwegian Visa offers affordable rental car insurance as an add-on. With the Morrow Bank Credit Card, the insurance is included at no extra cost.
Airport Lounge Access
The best payment cards include airport lounge access. This grants access to, for example, Helsinki Airport Lounges. The exact terms vary by card. The benefit may offer discounted lounge entry, a few free visits, or unlimited complimentary visits with a guest. Lounge access is usually provided in partnership with lounge networks such as Priority Pass and LoungeKey.
Curve Metal, American Express Platinum, and several Finnish banks’ premium cards offer lounge access.
Airline and Hotel Benefits
Premium cards—and even some no-annual-fee cards—offer airline and hotel perks. Purchases may earn airline miles. Expensive cards sometimes also upgrade users to higher tiers in the card issuer’s partner loyalty programs for free. For example, American Express Platinum cardholders reach higher tiers in several partners’ loyalty programs without extra requirements.
Finnair Visa and Bank Norwegian Visa are excellent cards for earning miles.
Replacement Card and Emergency Cash
Paid cards often include protection if your card is lost. In that case, you receive emergency cash and/or a replacement card at your destination within an agreed time. Although this is convenient, you should never travel with only one card. It is wise to carry three separate cards and store them in different places to reduce the risk of theft.
Other Valuable Perks
Bankruptcy Protection
It is sensible to pay for goods and services with a credit card so you can claim compensation if the ordered goods are not delivered or the purchased service is unavailable. This can happen, for example, in a bankruptcy situation. Charge and credit cards provide better protection than debit cards.
Purchase Protection Insurance
Purchase protection insurance is a common perk on many payment cards. If something goes wrong in the transaction or delivery, you can claim compensation for losses. Terms vary widely, so review them carefully.
Cashback Rewards
We have written a separate article about many cards’ cashback features.
Bottom Line
Do not think of a payment card as just a way to pay, but as a key to multiple perks. Payment is the core function, but the extras may bring more value to the cardholder. It can be smart to keep a few cards solely for payments, and the rest for their perks.
Even no-fee cards offer valuable benefits, so a monthly fee is not a measure of quality. Still, expensive cards tend to include financially more valuable perks on average. Do not get a pricey card without carefully assessing the benefits and risks. Affordable debit cards from fintech companies are often excellent, low-cost alternatives to expensive charge cards.