Credit cards can lead to a holiday debt hangover. And with card companies cutting credit lines, adding fees and raising interest rates lately, they haven't made many new friends among consumers.

But for savvy consumers, credit cards have advantages over other payment forms.

Here are a few reasons to use a credit card for your last-minute holiday purchases (check details and restrictions of these perks with your card issuer):

- Safety. Credit cards offer the most consumer protections, whether you shop in person or online. By federal law, cardholders are liable for only $50 in fraudulent charges, and all major cards hold you liable for nothing. Debit cards don't provide the same level of protection as credit cards.

- Free extended warranty. Extended service contracts are pushed hard by salespeople because they are huge profit generators for retailers. Many credit cards automatically extend the manufacturer's warranty - most double it - on items purchased with the card.

- Accidental damage. As wacky as it sounds, your credit card might reimburse you the repair cost if you accidentally damage a product shortly after purchase, assuming you used the credit card, of course. You also may be protected if the item is lost or stolen. "That's a cool little feature," said Bill Hardekopf, chief executive of, a credit card information Web site.

- Price protection. Just bought something and saw it on sale for less somewhere else? Your card might have you covered and credit you the difference.

- Return protection. Some cards give you your money back if you're dissatisfied for any reason and the store won't accept returns or the return period has expired.

- Travel protections. Traveling for the holidays? Your card may provide insurance on car rentals, travel cancellation or accidents, lost airline luggage and hotel burglary. It could also cover roadside dispatch service.

- Dispute help. Have a problem with a retailer that sold you a gift? Dispute the charge and let the credit card company fight with the retailer.

- Cash rewards. You can earn cash rewards with many cards. That's a good idea if you pay your balance every month. Otherwise, you should seek the best terms and interest rate. "A ton of people do not realize there are rewards programs out there for credit cards - that by simply using the credit card, you can get money back," Hardekopf said.

- Merchandise points. If you're cash-strapped and have accumulated merchandise points on a rewards credit card, you could use them to "buy" a few holiday gifts.

- Card portals. Instead of making online purchases at a retailer's site, see if that retailer has an affiliate link on your credit card company's site. When you use these links, your purchases might earn you extra rewards points.

- Accounting. It's easier to account for holiday purchases when you can run your finger down a credit card statement.

Of course, all those benefits might not outweigh the dangers of using credit cards. The biggest downside is potentially incurring interest charges if you don't pay off the balance. Also, studies show paying with plastic facilitates overspending. And running up balances near your credit limit, even if you pay them off each month, can hurt your credit score.

But if you can use cards wisely, learn about your card perks.

Gregory Karp is a personal finance writer for The Morning Call newspaper in Allentown, Pa. Readers may send him e-mail at

(c) 2009, The Morning Call (Allentown, Pa.)

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