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What is credit card protection?

Card issuers offer various forms of protection to prepare for fraud or faulty purchases.
Find out how credit card protection works, and how you can take advantage of it.
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How are credit card purchases protected?

There are several reasons you may be unhappy with a purchase. It could arrive damaged, get lost in delivery, or just not live up to your expectations. Shoppers in the U.S. end up returning around $351 billion worth of purchases, with UPS processing 6 million returned items in the week after Christmas alone.

Not all items are eligible, and terms vary by credit card issuer. Customers typically have to file their claims between 90 to 120 days of the date of purchase.

Issuers may also protect customers on returns of items that are working. Return protection can extend the amount of time you have to return unwanted items. Your credit card issuer may also reimburse you if the retailer refuses to accept an item returned to them within 60 to 90 days of the purchase date. Not all issuers offer this, with American Express and Chase being the only issuers amongst the top 10 who offer Purchase Protection. Exclusions apply.

You may also be satisfied with a purchase, but disappointed you bought it before a price reduction. With price protection, your credit card issuer could reimburse the difference between the price you paid and the item’s sale price if it was discounted within 60 to 90 days of the purchase date.

The types of protection a card issuer may offer are:

  1. Purchase Protection: Replace, refund or repair items that are damaged
  2. Return Protection: Reimburse working items that the retailer refuses to refund.
  3. Price Protection: Pay back the difference between the full price and sale price of an item.

What is credit card fraud protection?

Credit card fraud is the most common form of identity theft. 14.2 million credit card numbers were exposed in 2017 alone. Personal and business credit card Fraud Protection is crucial to keep both your funds and credit rating safe from criminal attacks.

Many credit card issuers have zero liability policies. You will also have zero liability if your credit card number is stolen, or you report your card lost or stolen before any transactions are made. Under the Fair Credit Billing Act, $50 is the maximum amount you are liable for in the case of credit card fraud.

Scammers may try to sell fake credit card protection policies. They could pretend to be from your credit card issuer’s security department and claim your account is vulnerable to hackers or has already been compromised by a computer bug. Never provide personal information to unsolicited calls or emails. Your credit card issuer already protects you against fraud, and you should contact them directly if you have any concerns.

Can I get protection for missed credit card payments?

Missing a payment on your credit card can harm your credit score. With credit card payment protection insurance, you can take a break from repayments during financial hardship without your score taking a hit.

Your credit card issuer may allow you to pay a monthly fee in exchange for suspended repayments and interest if you face financial hardship. The issuer can suspend your payments between 12 to 24 months and make the minimum monthly payment on your behalf. The issuers report your status as ‘current’ to the major credit bureaus, so your account will remain in good standing and your credit score won’t be affected.

Whether credit card payment protection insurance is worthwhile depends on several factors. You should consider your monthly costs, the amount of savings you have, and the likelihood of facing financial difficulty. Credit card issuers may also offer flexibility if you’re struggling to meet minimum payments, even if you don’t have protection. Call your issuer to discuss the problem. They may be able to reduce or defer payments to help you get back on track.

What additional protection and insurance can my credit card offer?

Other forms of protection offered by your credit card issuer can include travel and rental car insurance. Your issuer may reimburse travel-related purchases if your trip is delayed or cancelled, you miss connections, lose your luggage, or require emergency medical attention. Policies vary by the issuer, so make sure you check the terms before you apply.

Your issuer may also cover you for theft or damage to rental cars purchased with your credit card. If you decline the insurance from the rental agency, your credit card issuer may reimburse you up to the vehicle’s cash value. Exclusions apply, and this won’t apply in cases where the driver is at fault.

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