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Credit cards can get a bad rap.
After all, they can quickly lead you to a load of debt if you charge more than you can afford to repay. But when managed responsibly, using your credit card can protect you and your purchases.
That’s partially due to credit card purchase protection, a form of coverage if something you buy with your credit card is damaged or stolen. This is typically in addition to basic protections laid out in the Fair Credit Billing Act for all consumers, which protects you against unfair billing practices and provides you with a mechanism for addressing billing errors, such as being charged for items you did not receive.
When it comes to your individual credit card’s purchase protection, it’s important to know that not all purchases will qualify. You will also need to follow a claim process within a certain amount of time from the date your item is stolen or damaged.
Read up on what’s covered and what’s not, and know how to use your purchase protection benefits so you can make the most of them if you need to file a claim.
What does credit card purchase protection cover?
It’s often easier to understand what’s not covered, because policies are more explicit about what they will not include. “Services, tickets, perishables and gift cards generally aren’t eligible,” explains Ben Brown, CFP®, EA and the founder of financial planning and investment management firm Entelechy.
“Boats, cars, or other motorized vehicles aren’t typically eligible for purchase protection, and would be covered under a separate insurance policy,” says Brown, adding that credit card companies are unlikely to cover items that experience normal wear and tear.
Some items that may be covered include:
● Home and garden products
● Personal care items
As an example, let’s say you purchased a handbag two weeks ago and you left it in your car overnight. If your car was broken into and the handbag was stolen, the initial purchase might be covered under purchase protection if you have the original receipt, your credit card statement showing the transaction, and a police report documenting the break-in.
Chase, for one, defines what’s covered as stolen or damaged eligible personal property within 120 days of when you purchased the item.
Good to know: Protections for damage and theft do exist but they usually don’t cover what some companies call “mysterious disappearance.” Visa, for example, defines this as anytime an object goes missing without explanation and without evidence of a wrongful act committed.
Know your credit card company’s purchase protection policy
Request a copy of the terms of or a guide to your card’s benefits before you get into a situation where you need to file a claim.
The specifics of what’s covered and what’s not, along with the process for filing, doesn’t just vary between card payment networks like Visa® and MasterCard®. Each individual card issuer, such as your bank or credit union, can also follow a different policy.
You will need to contact your credit card issuers directly. Ask about your card’s benefits (and where you can get a copy).
These guidelines should explain:
● Who’s covered
● Which transactions can receive purchase protection coverage
● The dollar value limit of coverage per claim and per account
● Deadlines to file eligible claims
How to file a credit card purchase protection claim
Again, policies and requirements vary from card to card. But in general, you’ll need the following documentation to file a claim if you want to use your card’s purchase protection benefits:
● An itemized store receipt
● Your credit card statement showing the posted transaction
● A police report (if a purchase was stolen)
● Any documents that support your case of why a transaction should be covered by your card’s benefits
To start the claims process, you can call the customer service number on the back of your card. You can also run an online search for “[your credit card] + file a claim” to find and use your credit card company’s online claim form.
Once you access the form, fill it completely, sign it, and submit it for review (either through the online claims form, or by mail according to the instructions your credit card company can give you when you call).
Remember that you need to start the claims process as soon as you realize an item is stolen, damaged, defective or may otherwise qualify for purchase protection. If you have questions, call the customer service number on your credit card. Your credit card company’s representatives should be able to provide the answers you need or direct you to another representative who can assist you.
Almost all credit cards offer some degree of purchase protection, and can be applied in a variety of circumstances. Using your benefits can help you avoid losing money on an item that was lost or stolen.
Just be sure to act fast. Most protection policies only cover transactions for a certain amount of time, so you should file your claim as soon as you realize something is amiss with your purchase.
Be ready to provide itemized receipts, statements, police reports and other paperwork to support your claim. “The process and documentation requirements may seem like a hassle,” says Brown, “but can be well worth your time for big ticket items.”