Transcript of a brief CNBC segment (March 8, 2009) in which Ramit Sethi explains lesser-known credit card benefits: trip cancellation insurance that can cover airline change fees, credit-card-provided collision coverage for rental cars, and automatic extended-warranty coverage that often doubles a manufacturer's warranty. The tone is practical, consumer-advice focused, aimed at helping viewers extract value from card benefits.
Questions this video answers
Typically between $1,000 and $2,000 per year of coverage (spoken: "between one and $2,000 per year of coverage").
About $50,000 (spoken: "your credit card will actually back you up to about $50,000 for collision insurance").
Credit cards typically double the manufacturer's warranty (example: a six-month warranty becomes an additional six months via the card).
Chapters
Fees, changing rates. You already know the pitfalls of credit cards, but there are secret perks to your card that can protect you. Ramit Sethi is a specialist in sniffing through the fine print and finding value where you'd least expect it. Okay, Ramit, I've been looking forward to a vacation for months. Okay? All of a sudden I get a little sick, I can't go. What can my credit card do for me with those tickets?
Worst case scenario, you've been planning a trip for six or eight months. Two days before the trip, you get sick, you don't feel well, you go to the doctor, you can't make it well, you know your airline is going to charge you hundreds of dollars to change those tickets, right? Great thing about it is you just call up your credit card and say, hey, I got sick. I'd like to have the trip cancellation insurance kick in. They will cover those change fees for you.
And how many credit cards do this?
Most credit cards do it and they'll usually do it between one and $2,000 per year of coverage.
Oh that's great. That's excellent. Okay, now what about the car rental counter? I mean this is the place where they really push that insurance.
New rule, whenever you go to rent a car, never, never let them bully you into getting that additional collision insurance. It's completely worthless. Look, you've already got collision insurance from your car insurance company and your credit card will actually back you up to about $50,000 for collision insurance. So it's totally redundant. Don't let them do it to you.
Okay, so none of that. Alright, now here's a good one. Now you're buying a flat screen or a BlackBerry or any of those things. What is the advantage of putting it on the card?
So this is my favorite one. Every time I go to buy a big electronics purchase, I always do it on my credit card because you get huge benefits. So here's the thing. If you go to buy an MP3 player or a big screen TV, your credit card is automatically going to double your warranty. So you know how when you go up to the counter, they always try to sell you on the second?
Oh yes, always pushing a warranty, avoid it.
Your credit card automatically doubles it. So if you've got a six month warranty, your credit card's going to kick in another six months free on all you need to do if something goes wrong, call your credit guard up and say, hey, this thing broke, I'd like to have my extended warranty kick in and it's done.
Okay? Great. And you can find all this out about your credit cards in their fine print, right?
Well, it's a 40 page document usually and I'm a big weirdo, so I decided to read it. But what you can do is just call them up and say, hey, I'd like to have my list of perks. Can you send me a one pager? And they'll do it. And you have those perks in front of you next time you have to make a purchase.
Awesome tidbit. Awesome. Listen, if you missed any of our credit card Perks, check out onthemoney.cnbc.com Next up, Bidder, beware the risks of buying your next car at auction.
