An under-the-radar credit card benefit might not be as exciting or glamorous as points or miles, but in a pinch it’s just as useful

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  • Many credit cards offer purchase protections that insure your new purchases against damage or theft within a short period after purchase.
  • Some cards offer an extended manufacturer’s warranty, where your product is guaranteed beyond the protection offered by the manufacturer or retailer.
  • Credit card protections can be valuable. In some cases, just one claim may be worth more than a card’s annual fee.

Just over a year ago, my wife and I spent a few hundred dollars to buy our first robot vacuum. We were initially pretty happy with the purchase. While it didn’t give all of the features of the higher-end iRobot models, it did a reasonably good job of navigating our ranch-style home and sucking up dog hair and dirt that our kids track into the house.

The vacuum did a pretty good job for about a year, which is the length of the manufacturer’s warranty. Less than a month after passing that milestone, however, the vacuum will only beep at us and no longer works. A quick online search found that we were far from the only people to have this problem.

But unlike many people, we have a backup plan. Thanks to credit card benefits, we expect to have a replacement or repair at no cost, as we’ve done before when covered purchases didn’t work out. Before you go shopping, make sure you have the same coverage from your credit card.

Common credit card purchase protections

Credit cards can offer various purchase protection and insurance benefits. Many don’t have any purchase benefits at all, but many do. That’s why you should look beyond the bonus and rewards when picking a new card. The benefit can be important, too!

Here are some of the more common purchase protections you may find with your credit cards:

New purchase protection

This feature protects new purchases against unintended damage and theft within three to six months of the purchase. It feels terrible to buy something new and break it right away. This benefit will pay for repairs or replacement on eligible purchases.

For instance, The Platinum Card® from American Express provides coverage of up to $10,000 per claim, up to $50,000 per cardholder.

Automatic extended manufacturer’s warranty

Most purchases come with a guarantee from the manufacturer that the product will last at least a certain period of time. Some credit cards will add another year to the manufacturer’s warranties automatically where eligible. This is what we are using for the vacuum situation above.

For instance, American Express will match manufacturer warranties of two years or less, and extend manufacturer warranties of two years to five years by another two years, a benefit you get with a card like the American Express® Gold Card.

Price drop protection

If you buy something and the price goes down within a short period of time and the retailer won’t refund the difference, the card will.

This benefit isn’t as common as something like purchase protection, but you’ll still find it on cards like the Capital One Spark Cash for Business or the Capital One Spark Miles for Business, which, if you find a lower advertised price in a retailer’s ad, may refund the difference up to $500 per item and up to $2,500 a year per eligible account 60 days of the date of purchase. However, that is only for printed advertisements – prices advertised online are not eligible for this benefit.

Return protection

If you make an eligible purchase and the store won’t take it back, the credit card may reimburse you for the purchase price.

American Express offers return protection on all of its credit cards, up to $300 per item, up to $1,000 per year if you file a claim within 90 days. There are caveats and exceptions to this policy, which AmEx lists in full on its website.

Cell phone protection

This benefit is newer and less common, but can be quite valuable. If you pay for your phone and phone plan with a card offering this feature, it will pay for repairs or replacement for your phone. If you drop it in the toilet, you will be so happy you have it.

For instance, the Ink Business Preferred Credit Card (which does not cover lost phones) will pay up to $600 per claim, up to $1,800 in 12-month period, with a deductible of $100.

How credit card purchase protections work

You can find out if your card has purchase benefits on the card issuer’s website or the benefits detail package that comes with the card. There is a lot of fine print and the benefits can be somewhat restrictive in what they cover, so make sure you read how it all works with your card before heading to the register.

In most cases, the credit card company will use an outsourced provider to manage the purchase benefits. You can call the number on the back of your card, tell them you want to make a claim, and they will forward your call to the right place. In some cases, you may be able to file a claim online.

If you have any questions along the way, calling in should lead you to the answers. You may need to provide a receipt or invoice, credit card statement showing the charge, and other documentation.

Not all card issuers offer these types of benefits. And, of those that do, they are not always the same for each card. If you are shopping around for new credit cards, you should put this on your list of features to look for.

My experiences with purchase protection

I have used purchase protection a few times over the years. The first time was about five years ago. I purchased a digital product and the price went down within a few weeks. The seller would not reimburse me for the difference, so I tried out the price protection benefit.

I had to send in a receipt, a screenshot of the new price, and a copy of my statement. After everything was reviewed, I got a credit back to my account for the difference.

Last year, we purchased a sunshade (kind of like a tent with one open side) for park and beach visits. We opened it to look at it when it arrived, packed it back up, and put it in the included storage for our next use. The first time we actually wanted to use it, it was bent and unusable even though we followed the packing instructions.

We were denied a refund after going through the process on Amazon and opened up a claim with our credit card. The benefit processor required some specific information from the manufacturer, and in the process of getting that the manufacturer said they would just refund our purchase even though it was previously denied. That worked for us!

Next up, this vacuum that just beeps at us when we try to turn it on. I’m hoping for 3/3 for a favorable resolution where we had issues that required a claim.

Always check the benefits when choosing a new card

Almost every credit card has its own pros and cons. You have to weigh those when choosing a new card for your purchase needs. While benefits like these are not typically as important as annual fees and rewards, they are worth considering when picking a card.

If you ever do need to file a claim, you’ll be glad you have the coverage. And if you buy something and it doesn’t work out, never forget that your credit card might have your back.