Confident you're protected by all those flashy perks on your credit card? Not so fast.
Yes, your cards might boast everything from purchase protection to trip cancellation insurance to roadside assistance. But that doesn't mean you'll always be covered.
“Companies tend to put the good news in the headline and the bad news in the fine print,” says Edgar Dworsky, founder of ConsumerWorld.org.
Each benefit comes with strict rules and a laundry list of exclusions, experts say.
Here are some popular credit card perks, along with common pitfalls:
1. Purchase protection
Some cards come with purchase protection, a type of insurance offered through the payment networks — MasterCard, Visa, American Express and Discover. The cards will refund your money or replace or repair an item that gets lost, damaged or stolen within a certain timeframe, usually 60 to 90 days after purchase.
The catch: “There are exclusions,” says Greg Meyer, community relations manager for Meriwest Credit Union. Purchase protection typically doesn't cover live animals, plants, food, beverages, tickets, gift cards or motorized vehicles, to name a few. And certain types of loss probably aren't covered — for example, if the item gets destroyed in a natural disaster, Meyer says.
2. Price protection
If you make a purchase with a card that has price protection and then find a better deal on the same item, you can get a refund of the difference.
The catch: That better price you found might not count. For example, Discover's price protection excludes special discounts offered through a retailer's rewards program, products purchased on Internet auction sites and negotiated sales. And you typically need to produce written proof of the lower price, usually an ad, Dworsky says. “You can't just say, 'Oh, I saw it somewhere else, and it was $20 cheaper.'” And while some cards don't accept online ads or cover Internet purchases, others do. Dworsky says: “Obviously, you want to use a card that gives you the widest option of finding a lower sale price.”
3. Extended warranty coverage
Extended warranty coverage is offered through card payment networks and typically will tack an extra year onto the manufacturer's warranty. It's always a good idea to buy major appliances and expensive electronics with a card with this benefit, Dworsky says.
The catch: Each payment network has its own timeframe, Dworsky says. For example, MasterCard coverage typically applies only when the original manufacturer's warranty is one year or less, Dworsky says. But with Visa, the original warranty typically can be up to three years and with American Express, up to five. So if you use your MasterCard to buy a TV that comes with a two-year warranty and it breaks 25 months later, you might be out of luck.
4. Travel accident insurance
This benefit typically provides up to a certain dollar amount of coverage if a passenger is killed or dismembered while traveling with passage purchased with the card. For example, the coverage benefit on some Visa cards can be as high as $250,000.
The catch: You typically have to book your entire fare on the credit card that offers the benefit. If you use miles or points, for example, and pay taxes and fees with your card, you might not get the benefit, Meyer says. “There are a lot of limitations and exclusions, so it's critical for people to read their policies and understand what is covered and what is not,” Meyer says.
5. Car rental collision damage coverage
This benefit provides insurance for damage or theft of cars you rent with the card. It can vary greatly by card, Dworsky says.
The catch: On some cards, this coverage is not primary — it kicks in after your auto insurance. Also, it might not cover certain types of vehicles — for example, the American Express Platinum card excludes full-sized SUVs, off-road vehicles and “exotic” cars. And, some cards cover rental cars only for a certain time period, such as 15 or 30 days. And finally, the rental car company might charge some fees — such as “loss of use” fees while the car is being repaired — that the credit card might not pay.
6. Roadside assistance
It sounds comforting: Some cards offer roadside assistance, with a number you can call if your car breaks down and you get stranded.
The catch: You usually have to pay for the service (the fee typically gets charged to your card) and the benefits might not be all that generous. For example, Visa's roadside assistance service costs $59.95 a pop and only covers towing for five miles. “After that, you're at the mercy of the tow-truck driver,” Meyer says. “What if they'll tow you to the gas station, but you need to go to Joe's Garage? They might say, 'OK, that'll be another $75.'” You might want to consider joining AAA or a program through your car insurance provider, Meyer says.
How to avoid problems with your perks
Despite the trips and traps, here are five tips to help you increase your chances of success in claiming your credit card benefits:
Know the benefits on each of your cards. Get familiar with the benefits each card offers, Dworsky says. Read the fine print.
Pick the right card for each purchase. “Really think about what could go wrong with that purchase,” Dworsky says. For example, if you're buying an appliance, extended warranty coverage might be most important, he says. Or, if you expect an item to go on sale soon, you might want price protection.
Make the entire purchase on the card. In many cases, cards will specify that you must make the entire purchase on a card in order to use a perk. This causes problems for travelers who buy a ticket with rewards miles, then find they can't use the travel insurance or lost luggage benefits, Meyer says. You also could lose out if, for example, you buy a $100 item using a $20 gift card and putting the remainder on your credit card, Dworsky says.
Keep good records. To claim some benefits, you'll need to provide certain documentation along with your claim. It's a good idea to keep receipts, manufacturer warranty information and other documents.
Be persistent. In some cases, you might have to follow up several times to check the progress of your claim. And, if it gets denied, find out why, Dworsky says. “Maybe they made a mistake, maybe they'll bend over backwards for you if you plead your case.”
Of course, it's not always difficult to claim your credit card benefits. In fact, you might be surprised at how smoothly it goes, Dworsky says, noting that he once had a price protection claim approved in about a week.
“Sometimes it's easy, sometimes it's difficult,” he says. “You really can't predict how it's going to go.”