Credit cards often get a bad reputation because they can lead to debt. But with responsible use, credit cards can offer significant benefits.

One little-known benefit of credit cards is purchase protection. Credit card purchase protection helps protect certain purchases in case they are stolen or damaged. 

But how does purchase protection work, exactly? And do all cards offer this handy perk? 

What is credit card purchase protection?

Purchase protection is a perk offered by some credit cards that helps protect purchases you make using the credit card. It is a short-term insurance program for purchasing things with a credit card.

This perk covers you with a replacement or reimbursement if your purchase is damaged or stolen within a specific time frame after making the purchase. This is typically the first 90 to 120 days.

The details of purchase protection vary significantly, so it’s essential to read the fine print. And remember, only some credit cards even offer this perk!

How does purchase protection work?

Generally speaking, purchase protection kicks in once you make a purchase, and it covers items for the first 90–120 days.

Purchase protection usually provides a refund or a replacement if something happens to the item you buy. For example, the benefit might cover you if:

• A guitar you ordered online arrives damaged
• A laptop you purchased stops working
• A game you bought is stolen

Some cards are more strict with their rules. For instance, an item might be covered if it’s stolen, but not if it’s lost or misplaced. Other cards may cover accidental damage but not normal wear and tear on an item.

Purchase protection usually covers an item up to its replacement value or original purchase price. For instance, if you buy a $600 phone and it gets stolen, purchase protection could refund you up to $600.

In most cases, eligible purchases you make are automatically enrolled in purchase protection, so you don’t have to take any extra steps to cover a product. Just be sure to save the original itemized receipt to help with the claim if something does happen to your purchase.

Keep in mind that purchase protection programs have limits. For instance, there may be a:

• Per-item limit, which limits coverage on expensive items
• Annual limit, which limits the dollar amount of claims you can make in a year
• Claim limit, which limits the number of claims you can make in a given time

These limits reduce the card issuer’s risk and prevent people from abusing the system.

Which items are eligible?

The details vary by card issuer. Eligible items include things like clothing, electronics, and furniture\. Most typical purchases should qualify, but some items are excluded from coverage.

For example, unique items like artwork usually aren’t covered, nor are digital purchases like subscriptions.

Anything consumable is also usually excluded. Therefore, food, alcohol, cosmetics, etc., won’t typically qualify for purchase protection.

Services, events, and tickets are also excluded. So you can’t get a refund for a bad haircut or a missed flight!

There may also be a limit to the coverage you’ll get per item. For example, a card might only cover up to $1,000 — meaning a purchase over that amount can only be protected for a maximum of $1,000.

Again, the details vary, so it’s important to read the fine print!

How to use purchase protection

You’ll typically need to contact the card issuer to start the process. From there, you’ll likely be asked to submit the following:

• A receipt for the purchase
• The credit card statement showing the purchase
• Any documentation to support your claim (a police report, an insurance claim, images of the damaged item, etc.)

Additionally, you will often need to submit proof that the item is defective (like a picture) or has been stolen (like a police report). Of course, some card issuers ask for more information than others, and you should be prepared to submit any requested documentation.

Purchase protection claims can usually be filed online or by calling in. However, the process can take some time, as each claim requires a manual review. In many ways, purchase protection claims function similarly to insurance claims. But because of the effort involved, it might not be worth submitting purchase protection claims for low-cost items.

You may also be instructed to contact the merchant first. For example, many card issuers require that you attempt to resolve the issue with the merchant you purchased the item from before applying for purchase protection.

In many cases, the merchant can help. For example, if a box arrives at your doorstep damaged, many merchants will make things right if you contact them. Or, if an electronic item has issues, the warranty should cover it.

Purchase protection is generally “secondary coverage,” which only kicks in if other options don’t work. So, for instance, if you can still return the item, your credit card purchase protection typically won’t work. Or, if the item is still under warranty, purchase protection likely won’t cover a damaged item.

What about extended warranties and price protection?

Some credit cards offer other perks that are similar to purchase protection but not identical.

These include:

• Return protection makes it easier to return an item if the merchant doesn’t accept returns or the return period has passed. For example, return protection might allow you to return an item within 90 days, even if the merchant has a 30-day return policy.
• Price protection provides a partial refund if the price of an item drops after you purchase it. For example, price protection might give you a $10 refund if you buy a $60 game that goes on sale for $50 the following week.
• Extended warranty increases the length of warranty coverage on purchases you make using a credit card. For example, extended warranty coverage might increase the length of a laptop warranty from one year to two.

These are all benefits that work differently from purchase protection. However, many cards offer a combination of them.

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Credit cards with purchase protection

A wide variety of credit cards offer purchase protection. This perk is usually offered by card networks (Visa, Mastercard, and American Express) rather than banks.

Purchase protection tends to be more common on premium credit cards. For instance, most Visa Signature cards carry the perk, as do many World and World Elite Mastercards.

Some great credit cards with purchase protection include:

• The Chase Freedom Unlimited, a no-annual-fee card with an excellent rewards system
• The Platinum Card from American Express, a premium card with luxury perks and a big sign-up bonus
• The Chase Sapphire Preferred Card, a premium travel card with excellent perks for world travelers

Keep in mind that the details of purchase protection benefits vary depending on the card. Therefore, it’s essential to read through your account benefits package when you sign up or ask your credit card issuer if you have any questions.

Conclusion

Credit card purchase protection helps replace or refund damaged or stolen items within a certain period after the purchase. Only some credit cards offer purchase protection, and the details vary by card.

If you plan to use purchase protection, familiarize yourself with the rules and details on your card. Pay attention to how long the coverage lasts, which items are eligible, and how the claims process works.

Want to get the most out of all your credit cards? Kudos is a smart wallet that helps shoppers maximize their rewards and perks with every purchase!