3 Credit Card Benefits You’re Paying For But Not Using
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- By Luke Landes
- June 5, 2014
It certainly isn’t difficult to waste money with a credit card. Are you paying for a gym membership you don’t use, or subscribing to a larger Netflix plan than what you need? Or maybe you buy food items in bulk to save money, only to discard uncooked items when they spoil before you have the opportunity to prepare them.
These unnecessary expenses are easy to eliminate because once you start looking at your spending, the services you pay for without using stand out and might even cause you some frustration. Not all unused expenses are obvious, though, especially when it comes to credit card benefits.
How Cardholders Pay for Credit Card Rewards and Benefits
The best credit cards offer features and benefits designed to attract and satisfy spenders. Through higher interest rates, as well as higher fees for merchants that are passed on to cardholders, consumers end up paying for these membership privileges. There’s no line item at the end of the month showing how much each customer pays for each benefit, but these services cost issuers money, and that money comes from its customers.
The good news is that it’s pretty easy to take advantage of the benefits, although issuers will generally require customers to jump through a couple of hoops. Here are three of the most helpful but overlooked credit cards benefits. Be sure to check your agreement to see if your card offers these features, and check in advance before you apply for any new credit cards.
1. Purchase Price Protection
If your card offers purchase price protection, you will be able to receive a refund for the difference between the price you paid for an item and a lower advertised price within a certain time frame, usually 30 or 60 days.
Most shoppers have the tendency to stop comparing prices once an item has been purchased; however, prices fluctuate all the time. Using a card with this benefit reduces the risk of overpaying, but only if the buyer continues to monitor prices.
The best way to find out whether your card offers purchase price protection is to call the customer service phone number on the back of the card, particularly if you don’t like looking through your files and reading your customer agreement. Almost all American Express cards used to offer this benefit, but today few do. Visa Signature cards generally offer purchase price protection, as do many cards from MasterCard.
You can get help monitoring price changes using the PriceProtectr app, but you might need to print the advertisement to qualify for the price protection guarantee, depending on the rules of the plan offered with your card.
2. Purchase Protection
In general, manufacturer warranties don’t cover accidental damage or stolen property. Unless there is a problem with the manufacturing or shipping process, like a defective part or something obviously damaged in transit, you have no recourse with the manufacturer or retailer. Drop your new camera, and unless you purchased a special plan from the retailer that’s usually too expensive, you’re on your own.
However, many credit cards offer automatic purchase protection for certain products. On some American Express cards, for example, the products you buy are protected against accidental damage and theft for 90 days following the date of purchase. In many cases, consumers would be tempted to replace the item without realizing their credit card might cover the expense.
If you think you might be covered when a stroke of bad luck hits, call the issuer to clarify the terms of your coverage. You will likely need to complete several forms and wait some time for the replacement, but in many cases, this is still preferable to replacing the item yourself.
3. Extended Warranties
If your credit card offers extended warranties, and many do, your purchases are automatically covered for an additional amount of time over and above the manufacturer’s warranty. This feature alone makes those expensive extended warranties sold by retailers seem like a waste of money. Often, warranties sold by the retailer provide the same coverage that your credit card might offer, and charge you a significant amount of money.
If you do need to submit a claim, the process of dealing with your credit card issuer might be easier than dealing with the retailer.
This service often automatically doubles the term of your manufacturer’s warranty, up to one additional year. If the item is covered for 90 days, your credit card will add another 90 days. If the manufacturer’s warranty doesn’t expire until the end of the first year of owning the product, the credit card will add a second year. As with the other coverage types, you’ll need to check with the issuer to determine the terms and conditions of coverage.
Although some credit card issuers make it more difficult than others to use these benefits, their existence costs issuers money. You’re funding these programs every time you pay a late fee, pay interest, or even swipe your card.
Since even the most diligent credit card users, who pay their credit card bills in full every month, are helping the issuers cover the costs for people taking advantage of these benefits, you might as well use them when the opportunity presents itself.
Photo credit: Wonderlane