7 Things a Credit Card Can Do That Debit Cards Can't

A hand holding two different credit cards .

This post comes from Bill Hardekopf at partner site cardrates.com.

The credit card has become an easy target for Congressional grandstanding and regulations, but beneath the widely criticized rates and fees lie many good benefits that are usually hidden in the fine print.

A credit card can provide valuable purchase protection and insurance that are unmatched by cash and debit cards. Yet more consumers are forgoing these benefits and choosing debit cards instead. Total payment volume for debit cards surpassed credit card volume for the first time in 2009 – and it will continue to expand in 2010, according to a new report from Javelin Strategy & Research.

More than half – 56 percent – of consumers said they had used a credit card in the past month, down from 87 percent in 2007. The study predicts that figure will drop to 45 percent by 2020.

“Many consumers are switching to debit cards, but there are times when using
a credit card is your best choice, especially for tickets, large purchases, and many eligible purchases,” says Bill Hardekopf, CEO of cardrates.com and author of The Credit
Card Guidebook. ”However, insurance and purchase protection coverage vary by credit card issuers and credit cards available, so it’s a good idea to research these when comparing credit

Here are some of the extra benefits offered by credit card issuers and the many credit cards they have available…

1. Car rental loss/damage insurance

With many credit card issuers, using your credit card can cover damage incurred when renting a car, so you may not have to pay for the extra insurance coverage that car rental companies try to sell. To be safe, be sure to check the description of this coverage in your Cardmember Agreement. You must be the primary renter and use your card for the rental. To be covered by the car rental loss/damage insurance, you must decline the collision damage waiver (CDW) or similar option when you are reserving and picking up your rental car. Coverage applies for the first 30 days, and is over your other sources of insurance. Coverage may not be available in some countries.

Typical exclusions include: items stolen from inside or outside the vehicle; person not specified in the rental agreement/contract as an authorized driver; loss that occurs while driving under the influence of drugs or alcohol; racing or reckless driving; blowout or tire/rim damage that is not caused by theft or vandalism or is not a result of a vehicle collision causing tire or rim damage.

2. Credit Card's Price Protection

Price protection helps a consumer get the best price you can find on the products you buy. Many credit card issuers will refund the price difference if you find a lower price on the same item from the same manufacturer within a specified period (typically 60 days). The credit card issuer will set a refund limit. For example, Citi refunds the price difference up to $250 per item.

Standard exceptions include: internet purchases or advertisements; items subject to rebate or manufacturer’s coupon or a refund; items sold at “going out of business sales or “close out” advertisements; and customized items. Price protection does not cover airline and transportation tickets, travelers checks, cash, or its equivalent.

To get the price protection, save the printed advertisement and contact the program administrator for claim forms and filing procedures.

3. Credit Card's Purchase protection

Purchase protection coverage eligibility on purchases against accidental damage or theft for up to 90 days from the date of purchase. It can repair, replace, or reimburse for up to the amount charged. For example, American Express credit card coverage is limited to up to $1,000 per occurrence, and up to $50,000 per
credit card member account per policy year. It is over other sources of indemnity.

If a retailer will not accept a return within the first 90 days of purchase, some cards, like Chase Sapphire's preferred card, offer purchase protection and will reimburse you for the covered purchase on your credit card.

4. Extended Warranty Protection

This protection extends the length of the free repair period under the original manufacturer’s U.S. warranty up to one additional year. The warranty must be three years or less.

Capital One doubles the original warranty time and duplicates the coverage of the original manufacturer’s warranty up to a maximum of twelve months on most items you purchase. If you fail to properly register the original warranty as required by the manufacturer, the Extended Warranty will only double the actual warranty time that you received from the manufacturer.

To receive extended warranty protection, you must submit the store receipt, the credit card receipt, and a copy of the manufacturer’s warranty.

5. Common carrier lost luggage coverage

If you purchase your common carrier tickets with your credit card, lost luggage insurance will cover you and your dependents for permanently lost, stolen, or damaged bags while checked with your carrier. Lost luggage insurance is secondary to the carrier’s liability and applies after that coverage has been exhausted.

Luggage insurance varies by credit card issuer. Card features like Citi’s coverage for checked bags is up to $3,000 per occurrence per covered person, up to $10,000 total. American Express’ card features cover up to $1,250 for lost, stolen, or damaged carry-on baggage, and up to $500 for checked baggage. This is over the Common Carrier’s liability and includes up to $250 of coverage for high-risk items, such as computers, jewelry, and electronics. This means zero liability during your with your travel purchases.

6. Trip Cancellation and Trip Interruption Coverage

To get the coverage, you must purchase the trip entirely with your credit card. If certificates, vouchers, or frequent flier miles are used, any remaining charge for the trip must be paid entirely with the credit card. Coverage is typically limited to the lesser of $1,500 per calendar year or the original cost of the ticket.

If your trip is interrupted for a covered reason, you will be reimbursed for the travel on the carrier to your return destination or to join your group at their current location. Exclusions include: pre-existing medical conditions; participating in bodily contact sports; non-emergency treatment, or surgery; pregnancy, and childbirth (except for complications). Coverage is limited to the amount not covered by another insurance or indemnity. Some cards offer this coverage for free, while others may charge a premium.

7. Roadside Assistance

Some cards offer roadside assistance for gas delivery, tire changes, jump-starts, etc. The fees for the services are usually pre-negotiated and will be billed to your account. If you have a rental vehicle, call the car rental agency before you call your credit card company because many rental agencies have special procedures regarding emergency road service.

Other perks

Some credit cards offer even more benefits…

Medical prescription replacement assistance:  If medications are lost or forgotten, some card issuers will help you in obtaining new prescriptions.

Doctor referral/emergency medical transportation assistance: If you or another covered family member becomes injured or ill while traveling, your issuer can provide a global referral network of general physicians, dentists, hospitals, and pharmacies. It can also help arrange transportation to the nearest appropriate medical facility, and set-up and coordinate the transport. You are responsible for all costs associated with medical care and transport. In the case of a death, the Benefit Administrator can arrange for returning the remains of the deceased home.

Trip delay: When a covered trip is delayed more than 12 hours due to a covered event, expenses incurred as a result of the delay, such as meals and lodging, are reimbursed. (Example: Chase Sapphire)

Baggage delay: If your checked bags are delayed for 18 hours or more by a common carrier, you will be reimbursed for the emergency purchase of covered essential items. (Example: Chase Sapphire)

Roadside dispatch referral service: Convenient towing and locksmith services in the U.S.
and Canada is available 24/7. All costs are your responsibility.

Emergency ticket replacement: Helps you with the carrier’s lost ticket reimbursement procedures if you should lose your ticket and can arrange delivery of a replacement ticket to you. All costs are your responsibility. (Example: Visa Signature)

Common carrier travel insurance coverage: Some cards, like the Citi/AAdvantage and Discover cards, offer up to $500,000 in flight accident insurance.

Hotel/motel burglary insurance: This reimburses you for personal property stolen from your hotel or motel room.
Your hotel/motel stay must be purchased entirely with an eligible card.

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over two decades of experience in the industry.

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