Enjoy valuable built-in credit card purchase protection

3 Ways Your Credit Card Protects Purchases For Free

by Michael Dolen

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As we all know, not everything about credit cards is good. If a balance is carried, the debt will wreck havoc on your finances. However, on the flip side, if you're someone who pays them off in full 100% of the time, then the rewards and perks can be a real money-saver.

These days a number of credit cards (including many which are free) offer valuable built-in protections on the purchases you make. Here's a look at what three of the most popular and how you can get the most from them.

1. Purchase Protection

Last year, I bought one of those mini-blenders as a Christmas gift for a friend. Within two or three weeks, it was broken. Apparently he overdid it while trying to make protein shakes using chunky peanut butter and hard nuts. It burnt out the motor.

Fortunately, I had paid for it using a credit card with purchase protection. It's a free benefit that covers you in the event of damage, theft, and sometimes loss during the first three months after you buy an item. Of course, not every type of purchase will qualify, but luckily this blender did. Within a few days of reporting the incident, my credit card company gave me a statement credit for $32 (the price I paid).

Years ago, you would only see this benefit on the pricey American Express cards, but now can find it on many Visa and MasterCards, too. In fact, there's a good chance the credit card in your wallet or purse might already include this perk and you don't even know about it! But make sure you read the fine print, because the rules and exclusions vary by card.

2. Extended Warranty

Being that so many electronics are made overseas nowadays, it seems like a gamble every time you buy them. How long will that computer or TV really hold up? Most only have a manufacturer's warranty of 12 months (at best), and according to Murphy's law, that probably means they will go kaput a month after that!

There is always the option of buying an extended warranty, but those can easily increase the price of the purchase by 30% or more. A better option might be to simply pay for the item using a credit card that includes a good extended warranty perk. For those that offer it, your length of coverage is usually up to double what the manufacturer offers (with a max of one year extra). So if you bought a computer that had a one-year warranty, you would get another year of free coverage on top of that through the credit card.

3. Price Protection

Nothing is more frustrating than buying something, only to see its price drop shortly thereafter. Wouldn't it be great if you could get reimbursed for the difference when that happens?

There are cards out there that do just that. You won't find it on any American Express cards, but there are a handful of Visa and MasterCards from Chase and Citi that offer it. Under certain circumstances, they will cough up a max of $250 to $500 per claim when the price drops on an item after you already bought.

Does it sound too good to be true? Well, in all honesty, it sort of is. There is a lot of fine print on credit card price protection. Most notably, internet pricing doesn't count and you might only be able to use it when the lower price is physically advertised (i.e. Best Buy's weekly circular for sales). But despite the drawbacks, it is a free benefit that you should still keep in mind if it's included on your card.

Getting These Perks without a Credit Card?

As mentioned at the start, credit cards are not for everyone. If they lead to debt, it's best to avoid them altogether. You can still get many of these same benefits even without a credit card.

For example, the American Express Prepaid Card includes purchase protection. You will also find the perk on many charge cards (those require payment in full each month, unlike a credit card). And believe it or not, there are even a few debit cards that will toss in some of these perks, such as Fidelity's no annual fee debit card.


Everyone can milk these perks, even those who don't use credit cards!

Mike Dolen created and runs Credit Card Forum, a site for discussing the best deals for credit card rewards and benefits.

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