Credit cards are fantastic tools if you are responsible with credit. Whereas some people compare it to a hammer, a powerful tool when used properly, I like to think of it as a Swiss army knife. Like a Swiss army knife, there are parts of it that you will probably never use as often as the knife itself. However, in times of trouble, you'll be glad those tools are there.
There are several great credit card perks and protections that you probably didn't know about. Let's say you buy a brand new jacket and accidentally rip it on an errant nail. If you purchased it within the last 90 days using an American Express, MasterCard or Visa card, you have purchase protection that will reimburse you the cost of the jacket (or repair of the jacket) at no extra charge.
If you didn't know about that little perk, here are a few more that you might not be aware of:
Discover a price drop three days after you buy something? Most stores will usually credit you the difference (since you would otherwise return the product and then purchase it again) but for those cases where you can't, price protection is there for you. MasterCard and Visa offer 60-day price protection.
Did you change your mind about a purchase but the store refused your return? Many cards offer return-and-refund protection for a limited period of time, usually around 60 days. This is great for those times when the store only has a 30-day return policy and you decide on day 31 that you no longer want it.
Don't you hate buying something with a one-year warranty only to discover that it breaks on the 366th day? If you made the purchase with a credit card, chances are the card will offer a free extension on the manufacturer's warranty for up to an additional year. Most cards will double the original manufacturer's warranty up to another year at no extra charge. This is another good reason you should skip the extended-warranty pitch at the store.
Auto rental liability insurance
This perk is a little more well known than the others but it's still one that bears repeating. Many credit cards will offer supplemental collision-and-loss insurance that is junior behind your primary auto insurance, if you have it. This means you can likely skip the extensive loss-and-damage waiver, or LDW, insurance that the car rental company loves to sell to you. Some credit cards don't offer this automatically and you'll have to pay extra for this coverage, though it's often cheaper than at the car rental counter.
Certain cards, like American Express cards, offer purchase protection insurance that protects your purchases from accidental damage or theft for up to 90 days from the date of purchase. It's essentially a short-term insurance policy on each and every purchase you make with their card and it's paid for by the fees the card charges merchants. In the case of American Express, your protection is limited to $1,000 per occurrence and $50,000 per card account per policy year and is secondary insurance. All MasterCard and Visa cards also have this protection, called Purchase Assurance by MasterCard and Purchase Security by Visa.
Baggage insurance policy
Sadly, it's not uncommon for airlines to lose your bags and if you're one of the unlucky few whose bags are never recovered, the amount you can claim is limited by the Aviation Consumer Protection and Enforcement Department of the DOT. If you happen to exceed their limits, you may have recourse with your credit card company. American Express, for example, has a baggage insurance policy that covers up to $1,250 for carry-on luggage and $500 for checked baggage. It's less than the federal limits but it's supplemental, so it's in addition to the federal limits.
What are your favorite hidden perks of credit cards?