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Little-known credit card perks

By Jim Wang · Bankrate.com
Monday, April 11, 2011
Posted: 4 pm ET

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:

Price protection
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.

Return 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.

Warranty extensions
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.

Purchase protection
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?

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29 Comments
Buckster
April 17, 2011 at 5:31 pm

Just try and use these "services". thier purchase protection is a joke. Every loophole and awful excuse is used. I would love to here from someone who got thier money back or product replaced. I won't hold my breath.

Glenda Walls
April 17, 2011 at 4:27 pm

Credit Cards versus Cash: CC-higher price merchandise, Cash-lower prices. CC-overspend your funds, Cash- you cant overspend.
CC-cost you in fees, OL and Late charges, Cash - no charges, more to spend. CC-can ruin your credit, Cash-protects your credit. (If you need to make a big purchase, take advantage of the "same as cash" options it applicable, if not borrow from your Credit Union. Not a member, join one. All this info should be a "No Brainer" for people who want to make this economy better.

Bruce from Rockford
April 17, 2011 at 4:06 pm

While its true that using a credit card cost the merchant a percentage of the purchase, taking a bad check is costly also. I don't know what the comparison is but with a credit the merchant has their money. Also you don't have to wait for the clerk to figure out how much change to give you.-)

Loretta
April 17, 2011 at 3:56 pm

Go back to using checks and cash. It is the banks that have gotten us and this country in the back shape it is in now. We need to put a stop to banks, and big business and our government taking advantage of us. I have have two homes mortgaged throughmy bank for 34 years. NEVER missed or been late with one payment. Tried to get it refinanced and was denied. NEVER AGAIN will I use my bank or any credit card. I keep one for emergency when traveling but don't use it unless it is a die hard need.

Margaret
April 17, 2011 at 3:36 pm

The last time I rented a car, I waived the liability insurance since I had the credit card. Well, I never got into an accident. In fact the car stood at the hotel almost all week long. But upon return, the rental company found a scratch that was worth $440 worth to fix. My credit card was NOT helpful at all. They forwarded it to my car insurance. My car insurance had an 80% clause. Because of this, I got reimbursed 80% of the cost and the credit card people were so incredibly inept that I ended up dropping it and never got the whole thing reimbursed. THis process took a maddening 8 months to fix just to get the 80% back. I think I'll end up paying for the rental liability from now on, even if it is more expensive becasue the hassle was just not worth it.

sarahballantyne
April 17, 2011 at 3:32 pm

You need to be very careful how you use your credit cards. I only use mine for the most important items like my three months
supply of diabetic supplies whenever i do not have enought money
for them. Otherwise there is no reason i know of to use them. I
know that people use them for getting clothes,etc, but i feel and
have been brought up that if you cannot afford them to pay for them with money you do not need them. Well i need my diabetic
supplies.

Kristin White
April 13, 2011 at 11:02 pm

If you pull out the debit card for your purchases, do your small business merchants a favor and have them run it as "debit" instead of credit. It saves them a little bit on processing fees! Also interesting tidbit is those cards with the mileage reimbursement actually cost businesses more money to process on top of their regular fees. As the old saying goes, "Nothing is free in this world!"

ApplePi
April 13, 2011 at 3:07 am

@Josh. Credit cards enslave the irresponsible. While I agree that MANY fall into the trap of spending beyond their means, this does not mean credit cards in themselves are evil.

The sad thing about credit cards, is because they increase the cost for the store/service allowing their use, the cost of the good must be increased to offset it.

This, in effect, means that the actual cost of credit card usage is shared by users and non-users alike.

Josh Levitt
April 12, 2011 at 11:00 am

While these are valid offers, they aren't perks. They are marketing tactics.

Resist the lie that a credit card is a tool. It's just a product that is sold. They are completely unnecessary.

Credit cards result in payments and payments enslave you. Once we understand this, the financial condition of our future will improve.

The Ryan
April 12, 2011 at 3:23 am

Good information. I had forgotten about some of these perks, but they can be real life savers.