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Without fail, when you buy electronics or other equipment, you're asked to make an important decision: Do you want the store protection plan? For just 10% more, you'll have some vague amount of coverage against... something. Or, more often, you'll enjoy some arbitrary extension of the manufacturer's warranty.
If you're anything like me, you've given in to the retail pressure -- and large-purchase anxiety -- for peace of mind. But, how often have you actually used that expensive bit of reassurance?
This year, you can safely defeat that impending sense of retail doom with some strategic credit card use. Specifically, take advantage of two of the lesser-used credit card benefits: purchase protection and extended warranty coverage. While some issuers have scaled back their retail perks, plenty of our favorite rewards credit cards still offer both benefits. Let's take a deeper look.
1. Purchase protection
Having a valued piece of equipment get lost or stolen can be a nightmare. But when it happens to something you've barely worn the shine off -- well, that's just kicking you when you're down. Purchase protection may not save your stuff, but it can soften that metaphorical kick.
While the particulars vary by card, purchase protection generally offers 90 to 120 days of coverage against accidental damage or theft. Exactly what's covered isn't explicitly listed, but some things that are usually not covered include acts of war, confiscation by government authorities, and participation in a felony, riot, or protest. Items damaged through alteration or modification are also ineligible.
The amount of coverage also depends on the card, and can range from $500 to $10,000 per incident. Some cards also have annual or account caps, as well as coverage limits for claims that result from natural disasters. It's also worth noting that the card issuer may choose to repair or replace an item rather than give you a cash payment.
The fancier (read: more expensive) your credit card, the higher the coverage limits tend to go. For example, many of the top-tier travel rewards cards offer the most extensive purchase protection plans, with per-incident limits at the top end of the range:
- Chase Sapphire Reserve®: 120 days, $10,000 per incident, $50,000 per year
- The Platinum Card® from American Express: 90 days, $10,000 per incident, $50,000 per year
- Citi Prestige® Card: 90 days, $10,000 per incident, $50,000 per year
If you don't have a $550-a-year luxury travel card, you can still get purchase protection -- just don't expect it to cover your new baby grand piano. The Chase Freedom Flex℠, for instance, comes with 120 days of coverage, at up to $500 per incident. And the Blue Cash Preferred® Card from American Express provides purchase protection for 90 days, with a per-claim limit of $1,000.
Your coverage only extends to items purchased with the eligible credit card, and only to the extent of the purchase. So, if you use a card offering coverage to pay for half of a major purchase, only that half qualifies for the card's purchase protection. Items purchased with credit card rewards have the same benefits as regular card purchases. Make sure to keep your receipts!
2. Extended warranty coverage
Once you're past the purchase protection period, you're reliant upon the item manufacturer's warranty should anything go awry. If you have my luck, something will go sideways approximately 90 seconds after the manufacturer's warranty expires. Your credit card may have extra security for you here, too.
Most credit cards that offer some form of purchase protection also typically offer extended warranty coverage. As its name implies, this benefit extends the manufacturer's warranty that came with your item, usually by an extra year, though some cards offer an extra 24 months.
Not every warranty qualifies for an extension. Most issuers limit coverage to manufacturer's warranties of specific length; most plans won't extend a manufacturer's warranty that is more than five years long. Some plans only extend warranties of three years or less. Coverage is generally capped at $10,000 per item and $50,000 per account.
Although purchase protection plans get better as cards get more expensive, extended warranty coverage tends to vary more by issuer than by card. Some great (and affordable) rewards cards with quality extended warranty coverage include:
- Citi Premier® Card: Two extra years on warranties of five years or less
- Amex EveryDay® Preferred Credit Card : One extra year on warranties of five years or less
- Chase Sapphire Preferred® Card: One extra year on warranties of three years or less
The extended warranty matches what the manufacturer warranty covered, and only up to the amount charged on your card (or the $10,000 cap, whichever is lower). And, of course, only items that come with a manufacturer's warranty in the first place qualify for extended coverage.
Other exclusions include vehicles (cars, boats, aircraft, etc.) and tires, used, antique, or pre-owned items, commercial purchases, land and buildings, plants, live animals, and services that are not specifically part of an item's manufacturer's warranty.
Don't pay extra for peace of mind
Anyone who's spent an agonizing few minutes at the register envisioning every way their new electronics could see an untimely demise has been tempted by pricey store protection plans. But you don't need to throw away your money for reassurance that what you paid won't be wasted if your purchase meets its maker.
You can get that same peace of mind by simply taking advantage of benefits you may already have in your wallet. Check your cardholder benefits (online or through your issuer's mobile app) to see if you have purchase protection or extended warranty coverage before you waste money on a store protection plan.
