A Simple Guide to Credit Card Purchase Protection

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Credit card purchase protection is a common cardholder perk. Here's how it works.

Credit card purchase protection is a common cardholder perk. Here's how it works. 

There are many benefits to buying items with a credit card. And purchase protection could potentially be one of them. 

Purchase protection is a common cardholder perk offered on many different credit cards from various issuers, including Visa, Mastercard, and American Express. It is a free benefit that enables you to get reimbursed when certain things go wrong after you've made a purchase using your card.

While the specifics of credit card purchase protection can vary from card to card, generally this type of protection reimburses you in the event that an item you buy on your credit card is stolen or accidentally damaged shortly after you purchase it.

If you make an expensive purchase and something happens to the item soon after you bought it, credit card purchase protection could help you avoid serious financial loss. However, there are some hoops that you'll likely have to jump through, including making a claim with other eligible insurance companies and submitting certain documentation to your card issuer within a designated period of time. 

This guide to credit card purchase protection will help you determine how this cardholder perk could help you if you've bought an item and something happened to it that could entitle you to be reimbursed for your losses. 

What is credit card purchase protection?

Credit card purchase protection applies to purchases that you make on a credit card that has this cardholder benefit. The purchase protection provides reimbursement for a purchase you made in the event that certain things happen to that purchase within a set time after buying the item.

Typically, credit card purchase protection covers your purchases for anywhere from 60 to 120 days after you buy something using your card. Usually, it provides coverage if the item you buy is stolen or damaged accidentally -- if you simply lose the item, it is unlikely to be covered. 

If the item is bought as a gift, the coverage extends to the person who receives the covered item. However, it is typically the responsibility of the cardholder to notify the credit card issuer within a designated period of time. Providing timely notice is essential. 

You're usually covered only up to a certain dollar amount, such as $500 or $1,000. So if you buy a brand new $1,000 iPhone and it's stolen within the first few months of your purchase, you would be covered in full on some cards or in part on others. It all depends on the extent of the protection that your card provides. 

Many credit cards also exclude certain items from coverage, such as computer software, items that have been purchased for commercial use, antiques and collectibles, and used or pre-owned items. And items that disappear mysteriously without evidence that a wrongful act has occurred are also typically excluded from coverage. 

How to use credit card purchase protection

In most cases, credit card purchase protection provides you with secondary insurance coverage. This means you need to first make a claim with other insurers that could potentially cover your losses. This would likely include your homeowner's insurer or your rental insurance provider. 

If you are not covered by other insurance, or if you've already made a claim with that insurer and still have uncompensated financial loss, you'll need to check the claims process in your cardmember agreement. 

Typically, you'll need to provide some documentation to your credit card company as well as complete a form requesting reimbursement under your credit card purchase protection. Some of the documentation that your card issuer will likely request when you make your claim includes:

  • A completed claim form obtained from your credit card company
  • A credit card statement showing when you made the purchase on the card
  • A receipt providing details about the specific item you purchased and that you are making a claim for
  • Proof you made an insurance claim with your homeowner's insurer, renter's insurer, or other primary insurance provider, if applicable 
  • A police report if you are filing a claim because your purchased item was stolen

Most credit card companies allow you to make claims either online or via telephone. For example, here are the telephone numbers and claim forms for several major credit card issuers:

How to find out if you have purchase protection

To determine whether you have purchase protection, check your cardmember agreement or contact your credit card company's customer service and ask if you have this cardholder benefit. 

Purchase protection is different from other benefits, such as price protection, which provides you with reimbursement if you buy an item and the price falls within a short time after your purchase. It is also distinct from credit card extended warranties, which provide an additional warranty on eligible purchases once the manufacturer's warranty expires. 

If you are signing up for a new credit card, you should look at the card's list of features to see if it offers purchase protection. This can be a big benefit if you shop often for expensive items and you don't want to have to pay out-of-pocket to replace them in the event of damage or theft. 

Credit card purchase protection can help you

Credit card purchase protection can save you from big financial loss if you buy an expensive item using your credit card and then something happens to your new possession. You should always check with your credit card company to see if you have this benefit. That way you can take advantage of it and avoid out-of-pocket losses after the theft or damage of something you've bought using your card. 

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