Many credit cards offer purchase protection as a standard benefit but if you want to take full advantage of it, make sure that you understand how it works and what it covers.
Purchase Protection is a credit card benefit that acts as a kind of insurance. When you use your credit card to purchase qualifying merchandise, Purchase Protection can ensure that you’ll be able to replace it or get a refund. It doesn’t matter if the item is lost, stolen, or damaged: if it happens within the grace period, Purchase Protection will cover it.
Credit cards already carry a kind of insurance that protects you from purchasing merchandise which turns out to be faulty or defective. Simply contact your credit card company and they will handle the exchange. Like most things there are restrictions on this benefit, but it is definitely something that makes credit cards more attractive. This is not the same thing as Purchase Protection. Purchase Protection is also dissimilar from additional coverage that you might purchase at the register as you are finishing your transaction. You might be surprised to learn that this is one of the least lucrative investments you can ever make with your credit card as this benefit is something you will very rarely use.
Of course, benefits like Purchase Protection are, generally, only found on high-end credit cards. These might include American Express, cards in the Visa Signature series, the WorldElite MasterCard. Indeed, some cards have extremely rich benefits; unfortunately many consumers do not even know they have these benefits, and if they are aware of them they don’t know how to use them.
Indeed, if you have a high-end credit card you should definitely learn all that you can about Purchase Protection. As a matter of fact, this benefit can be helpful in many situations. American Express’ Purchase Protection plan, for example, covers things like: your bike getting stolen, your dog chewing up your new shoes, or your new camera falling into the pool. It is exceedingly important to note that Purchase Protection (with American Express) might cover your camera if it fell in the pool and you were able to fish it out, but not if it fell into the ocean and you had to leave it behind.
Desiree Fish, vice president of public affairs and communications for American Express understands this personally, as she had to use the benefit once. She lost one of her new white gold-and-sapphire earrings one night and she had to send the other one to American Express to confirm she was filing a legitimate claim. They credited her account and she went to purchase a new pair. Filing a claim like this is much like filing an insurance claim so it should feel somewhat familiar. This also means that you will have to jump through whatever hoops they set before you. Of course, the legwork and the paperwork are usually worth it in the end.
Before you jump for joy at the thought of this great benefit you need to remember that each credit card company judges these rewards on a case-by-case basis. This means that you could enjoy different benefits and different levels of benefits depending on what combination of cards you carry in your wallet. Some credit cards, for example, exclude this benefit from incidents involving items stolen from your car, things you might have left out in public, things stolen from a gym or school locker, and more. In addition, some credit card issuers report that they will not cover items lost or damaged in the event of large-scale catastrophes like war, acts of terrorism, or earthquakes.
- FTC Warns of Prepaid Card Scams – May 23, 2013