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How Credit Cards Protect Purchases

You already know about bonus travel miles and cash back rewards, but some credit card benefits stretch well beyond instant savings on a vacation getaway. Many credit cards include purchasing safeguards that protect against anything from rental car insurance to extended warranties. If you can't find your credit card policy or if you're confused by the jargon, call your bank or credit card provider to ask about the benefits you're entitled to. Taking the time to understand your credit card protection plan might determine when you use credit or cash on your next big purchase.

5 Credit Card Protection Policies


1. Car Rental Insurance

Saving money on your next vacation can start by reducing or declining car rental insurance. Many credit cards offer car damage protection against collision and theft. Keep in mind this isn't full protection because many of these policies fail to protect against liability if you're sued. Since services vary, contact your credit card representative for complete guidelines on car rental protection.

2. Return Protection

Tried to return an item, but you missed the store purchase return deadline? Your credit card can help. If the item is still in new condition, many credit cards will accept returns up to 180 days after the purchase. Typically, the card holder will need to ship the item to the card provider, which then sells the item to a third party. Many credit card providers have caps on return amounts. For instance, American Express credit cards will refund up to $600 for a single item, and $2,500 per year for each card holder.

3. Purchase Protection

Many credit cards offer purchase protection for items that break or are stolen within the first few months of the purchase. Similar to credit card return protection, most purchase protection plans reserve a cap on refund amounts, and the credit card issuer has the option to replace, repair or refund a credit for the item. In situations where the item is stolen, you may need to file a police report. Since homeowners and auto insurance policies also protect damaged or stolen purchases, you may need to file a claim with your insurance before issuing a claim to your credit card provider.

4. Price Protection

If you purchase an item and find it is on deep discount a week later, your credit card can help make up the difference. Many store policies will offer a price match for sale items, but if that isn't an option, credit cards like the Chase Sapphire card can help shoppers get back the price difference up to 90 days after the purchase. To claim a price difference with your credit card provider, show your original purchase receipt, as well as proof of the price discount from an advertisement or store website. Depending on the card, price protection might not apply to clearance or close-out sales.

5. Extended Warranty

Wondering if you should add an extended warranty to your next big purchase? Think again. Many credit cards already offer extended warranty protection that is comparable to many in-store extended warranty packages. Credit card companies like American Express offer an extra 90 days of coverage on items with an existing 90-day warranty, and an additional year of coverage for items with a four-year warranty. To make an extended warranty claim with a card provider, the cardholder will need to provide itemized documentation such as the receipt, credit card statement and/or the original warranty.

Disclaimer: This content is not provided or commissioned by the company whose products are featured on this site. Any opinions, analyses, reviews or evaluations provided here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by the Advertiser. This site may be compensated through the Advertiser's affiliate programs.

Photo credit: Shutterstock / Johan Swanepoel

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Logan Abbott's picture

Logan Abbott is a personal finance and credit card expert with over 5 years of experience writing about each topic. He is a graduate of the USC Marshall School of Business, and also contributes to other online finance publications. He has been quoted in the New York Times, San Diego Union Tribune, TheStreet, and more.

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