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Purchase protection from a credit card?

By Leslie McFadden · Bankrate.com
Thursday, July 8, 2010
Posted: 2 pm ET

This week I made use of a credit card perk probably few people know of or use: purchase protection coverage.

What happened: My earbud headphones, which I use daily while walking in the city, broke two days ago and needed replacing. I headed straight to an electronics store and bought a new pair on my Blue credit card from American Express.

As anyone who has purchased a small electronic gadget knows, getting through the thick plastic casing takes a few dedicated minutes with a pair of scissors. It was during this furious cutting that I accidentally sliced through the coil of headphone wires.

After a fit of cursing my cutting skills, I remembered I had purchased the headphones with my American Express credit card, which offers free purchase protection against loss, theft or damage for up to 90 days after the date of purchase. Even if the clumsy cardholder herself caused the damage. The Web page for purchase protection on the AmEx site confirms coverage for accidental damage: "Pull a loose string on your new sweater and left with a giant hole? Good thing you have Purchase Protection that protects your eligible purchases."

The plan does have its limitations. It promises reimbursement, or a repaired or replacement item for covered purchases, but caps the refund amount at $1,000 per incident, and $50,000 per account per policy year. The refund can't exceed the original purchase amount. Specific items are excluded from coverage, which range from perfume to animals and motorcycles.

Does your card come with purchase protection?

Generally, this benefit will cover theft, loss or accidental damage to an item recently purchased on the card. Restrictions and exclusions vary by issuer. Not every credit card comes with automatic purchase protection insurance, so you'll want to check with your  issuer to find out if your particular card has the perk, and what the policy limitations are. Not all purchases may be eligible, so make sure to read the terms and conditions carefully. Purchase protection is more common on premium cards, such as American Express credit cards or Visa Signature cards.

CreditCardGuide.com, a Bankrate-owned website, has a useful list of eight other credit card benefits you may have.

Have you ever used your purchase protection policy? What was the outcome?

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1 Comment
Clinton
July 08, 2010 at 4:49 pm

My parents purchased two extended warranties using their Credit Union Visa card. Many months later (maybe a year), they were notified that warranty company's policy writer for their two warranties went under. Their two extended warranties were now useless. After calling the credit union, the charges were reversed for the policies. Over $2,000! I use credit cards for everything possible. Why? Convenience, Security (no cash carried), Buyer Protection, Easy Reconcilliation, Tracking, and Rewards. I only recommend this to friends if they can pay the balance in full every month. That is the key!