Purchase Protection: Credit Cards to the Rescue
Sep 9th, 2009 by Jennifer Lynn
[This is a guest post by Elisabeth Chan, who runs Creditnet.com and holds a B.S. degree from BYU’s Marriott School of Management. Creditnet is a free resource for anyone who wants to learn more about credit. At Creditnet.com, you can compare hundreds of the best credit cards online, such as student cards and 0% interest credit cards. When not working on Creditnet.com, Elisabeth can be found strolling through Pike Place Market or taking a dip in Lake Washington.]
My friend and I are classic examples of two opposing views on credit. I charge almost everything to my credit cards and use my wallet’s cash compartment to store receipts. My friend (let’s call her Kate), however, could pay for anything from a pack of gum to an LCD flat screen with the cash she has in her wallet at any given moment, and she would never use a loan like this site, even if needed.
Although Kate is of the ‘credit cards are evil’ mindset, her views on credit softened after her month-old iPhone was stolen from her purse on a Seattle Metro bus earlier this year. When she realized her phone was stolen, Kate called Seattle Metro and was told all she could do was report the theft to the local police department.
Kate was deflated when she called to tell me about the theft. Knowing her views on credit and doubtful of an affirmative answer, I asked if the phone was purchased using a credit card. I was surprised and relieved to hear that yes, the phone was purchased a month ago by her husband on his American Express card as an anniversary gift. I then told her why that was the smartest way to purchase her phone: a little something called Purchase Protection.
Purchase Protection is a standard insurance program offered by most credit cards, including all American Express cards, Visa Signature cards, Discover business cards, and MasterCard Gold, Platinum, and World cards. This program protects your eligible purchases in the event of theft or accidental damage within 90 days of purchasing the product on your card. That’s right, if you buy something and within 90 days it is accidentally damaged or stolen, your credit card may reimburse you the original purchase price! What’s cash got on that?
Each Purchase Protection plan differs depending on who is offering the plan (i.e. Visa, MasterCard, American Express, Discover), so be sure to review your card disclosures to read program rules. For example, not all purchases are considered “eligible purchases”. Perishable foods, motor vehicles, and custom-made furniture are examples of some products not covered by Purchase Protection plans.
Also, in cases of theft, proof of the theft is often required to help curtail fraud, which is why you should always file a police report or report the theft to local security. Most plans also require you to submit a claim within 30 days of the incident of theft of damage. If you’re able to prove you were unable to submit the claim within 30 days, then you may receive an exception and be allowed to submit a claim.
The day after I explained Purchase Protection plans to Kate, she and her husband contacted American Express and sent in the required documentation, such as the original receipt and police report. The claim was approved in two weeks, followed by an immediate credit to the credit card for the exact amount paid for the phone.
Kate still carries a lot of cash. But she now makes sure her husband is nearby with his credit card if she ever wants to buy anything she wants protected by a Purchase Protection plan.
Nice reminder…this is one of those benefits of credit cards that’s often overlooked or even forgotten by most people. I can say from personal experience that it does come in handy – I used it for a new TV that was accidentally damaged in a move a few years back.
I am glad I stumbled across your site. I use credit cards a whole lot and I didn’t know about purchase protection. I used to even charge a .75 cent candy bar I would bought but now I pay for everyday purchases with cash so it makes it easier for me to review my statements when I don’t have to go through so many tiny purchases.
It has become apparent that cash back credit cards have recently been on a steep decline as far as availability goes. Some might say that in these particularly difficult financial times, having CASH BACK would be what they want, ideally.
In 2005, 43 different credit cards offered cash back as a reward. in 2009, there are only 13. But what consumers need to come to realize, is that the cash back reward was usually limited to 15-20 dollars a month. so wouldnt you prefer to get air miles, which may save you much more than 15-20 dollars a month, next time you travel? Or how about something that you use everyday, like fuel. Free fuel is the same thing as free money essentially.
Busineses are the ones who seem to truly benefit from the cash back credit card reward. They don’t seem to have a limit per month, rather a .5% on their spendings.
Hi again,
I hope you’re doing well. I’m emailing to follow up from the last inquiry I made a while back about guest post submissions. Are you currently accepting them? Again, my name is Alan and I write for a debt consolidation advice blog at http://www.adviceconsolidationdebt.com/resources.
Let me know as soon as you can.
Thanks,
Alan
A nice feature that I’m sure not many consumers know about. My questions would be who ends up footing the bill. Is the money taken back from the original retailer or do the credit card companies have some type of insurance policy that covers this.
On a side note, grats on your broke-ass debt turn around. Increasing net worth by $20,000 in just under 3 years is great.
Trevor
I absolutely love these kinds of credit card benefits that come in handy just when you need them. I bought my wife a new iphone with my American Express and when she dropped it during the first week, American Express came through for us and replaced 100% of the cost of the iphone simply because we had purchased it with our Amex within the last 30 days. Sometimes credit cards just rock!