If you're disciplined with your credit card use, your cards can be valuable tools. By using a credit card, you can forgo the hassle of carrying cash and even earn valuable rewards to redeem for gift cards, statement credits, airline miles, or travel.
However, credit cards have other benefits than just rewards; many cards come with added protections and benefits that can give you even more value. Learning how credit card protections work — and which cards have the best perks — can help you use your card to its full potential.
Credit cards are common; most U.S. adults have at least one credit card. However, people don't always understand all their credit cards have to offer and may be missing out on useful benefits. These are some of the most commonly available credit card protections:
Purchase protection covers your new purchases for a specific period, such as 120 days from the date you bought them. If the purchase is damaged, stolen, or stops working during that period, your card issuer will reimburse you for the item's purchase price.
There's typically a cap per incident and per account; for example, the card issuer may only reimburse you up to $500 per claim and up to $50,000 per account.
With extended warranty protection, the manufacturer's warranty on eligible items is lengthened. Usually, credit cards that offer extended warranty protection will increase the warranty by one year. If your item needs to be repaired or replaced, this benefit can help you save money by allowing you to use the warranty longer.
Extended warranty protection is usually a secondary benefit, meaning it kicks in only after you've exhausted your other warranties or insurance.
If your credit card provides return protection, this benefit allows you to get a refund of an item's purchase price if the retailer doesn't accept the return within a certain period, such as 90 days from the transaction date.
For example, those who have the American Express Blue Cash Preferred card can qualify for a refund of the full purchase price — minus shipping and handling costs — up to $300 per item and up to $1,000 per calendar year.
Zero liability protection ensures you're not responsible for unauthorized or fraudulent transactions made to your credit card account. If your information is stolen, zero liability protection keeps you from experiencing any financial losses.
Dispute resolution is a benefit that helps you resolve issues with retailers or merchants. For example, if you receive an order that's defective or not as described, you can dispute the charge with your credit card company, and the company will investigate the dispute. You'll get a full refund if the company rules in your favor.
Besides basic purchase protections, many credit cards include other perks for travel or shopping. These are some other common card benefits:
Baggage loss or delay insurance can lessen the inconvenience of not having your luggage on your trip. With this benefit, the credit card issuer will reimburse you up to a certain amount to pay for toiletries, clothing, or other essentials while you wait for your bags.
For example, Southwest Rapid Rewards Plus cardholders can receive up to $100 per day for up to three days if their luggage is delayed by six hours or more. And, if your luggage is lost or damaged, you can qualify for up to $3,000 in reimbursement.
When you rent a car, you may need to purchase a rental car policy at the counter to protect yourself. However, some cards offer car rental collision damage waiver protection, a benefit that protects you against damages or theft that occurs to the rental car.
To take advantage of this perk, you have to decline the offer of rental car insurance from the rental company and use your card to pay for the entire cost. Credit card-provided coverage is usually secondary, meaning you have to use your primary or car insurance first before the credit card will cover the claim.
You also need to check any exclusions that may apply; credit card companies often exclude certain types of vehicles, such as luxury cars or commercial vehicles.
You may be eligible for cell phone insurance if you pay your phone bill with your credit card. This insurance protects you against damage or theft up to a certain amount per year.
For example, those withUsing a credit card an American Express Platinum card can get reimbursed for up to $800 per claim for repairs or replacement costs, up to a maximum of two approved claims per 12-month period. Coverage does involve a deductible; with the Amex Platinum card, the deductible is $50. (Eligibility and benefit level varies by card. Terms, conditions, and limitations apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by Amex Assurance Company.)
Travel interruption and cancellation
If you book your trip with your credit card, some cards will automatically apply travel insurance to your plan. If your trip is interrupted or canceled because of an eligible reason, such as extreme weather or a death in the family, your credit card will reimburse you for your nonrefundable expenses.
Now that you know what common benefits and protections are available, you're prepared to maximize your card's usefulness (or shop for a new card with more perks). To take advantage of your credit card protections, follow these steps:
Choose a card carefully: Credit cards may not offer all the protections and benefits described above; card perks vary by issuer and card. If there is a certain perk you're looking for in a new credit card, read the card's terms and conditions to find out if it's available.
Review the card agreement: Make sure you understand your card's fine print. You can view your cardmember agreement and the details for any benefits through your card's online portal or by looking up your card's disclosures at consumerfinance.gov.
Contact the benefits administrator: To get reimbursed under protections like return protection or purchase protection, contact your card's benefits administrator; you can view their contact information in your cardmember agreement. When you call, the administrator will ask you some questions and, based on the information you provide, send you the necessary claim forms.
Fill out a claim form: Next, fill out the claim form. You'll have to provide details on the purchase type, what happened, and the date any issues occurred.
Submit supporting documentation: You may need to submit supporting documents, such as your original receipt, a copy of a repair estimate, or a police report.
Once the claim is submitted, the credit card company will review it and make a decision. The benefits administrator can give you an idea of timing and when to expect a decision and reimbursement.
This article was edited by Rebecca McCracken
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to chof360 Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
