I’ve seen many personal finance blogs and books rail against the evils of credit cards. Dave Ramsey, for example, has a very negative view of credit cards. I’ve always been in the “credit cards are good” camp, if you use them wisely. However, there’s a very good reason NOT to pay cash for big-ticket electronics: purchase protection. My friend used his credit card to buy a new Apple laptop and is very thankful he did.

His Purchase Protection Story
One morning about a month after buying the laptop, he pulled it out of the case and turned it on. Rather than the flawless screen he was expecting, there was a giant splotch at the top of the screen. It looked a lot like an inkblot. The rest of the screen still worked and there was no damage to the outside, but that part of the screen was unusable.

He took it to Apple, which refused to cover the repair under the warranty. They insisted it was damage, not a defect. They advised him to call his credit card company.

So he did. He got a repair estimate and filed a claim with Mastercard under their Purchase Assurance plan. Two weeks later he got a check to cover the repair. The repair cost was half the price of the laptop! Unfortunately, the estimate didn’t include tax, so he’s filed a second claim for the $50 in tax.

How Credit Card Purchase Protection Works
The exact protection you receive varies by issuer. Check your issuer’s website for limits, but usually purchase protection and purchase assurance cover up to $1,000 for fire, theft, or damage within the first 90 days. Some will also cover it if you simply lose the item. If you use a business credit card, coverage limits are typically higher.

In addition to covering fire, theft, or damage for 90 days, many cards also double your warranty.

To file a claim, you’ll need a receipt for the original purchase. If the item was stolen, you’ll probably need a loss report or police report. If you need a repair, you’ll also need to include a repair estimate. Contact your card issuer for instructions on filing a claim.

Once your claim is approved, you’ll receive a check in the mail for the amount covered.

Most Mastercards include coverage. Visa offers Purchase Security coverage, but only on certain cards. American Express coverage is equivalent to Mastercard protection on most cards, and some cards offer even greater protection.

What Should You Buy with a Credit Card?
If you’re planning to buy high-end electronics or small electronics that are easily lost or stolen, I would recommend buying it with a credit card. This is especially true of anything with a plasma or LCD screen, which are notoriously expensive to fix. When you use a card that offers an extended warranty benefit, you can skip the overpriced warranty offered by the store a.

Here are some items I would buy with a credit card to because of purchase protection and extended warranty coverage:

  • Video camera
  • Digital camera
  • MP3 player
  • Cell phone
  • Laptop
  • Desktop computer
  • LCD monitor
  • LCD TV
  • Plasma TV
  • Projection TV

Obviously, it’s best to use a card you pay off every month. If you add the purchase to one that already has a balance, you could end up paying more in interest than you receive in benefits.

If you’re planning on a big-ticket electronics purchase, review the protection plans offered by your cards. Choose the best coverage on the card without a balance so you can also buy piece of mind when you make your purchase.


12 Responses to “How Credit Card Purchase Protection Saved My Friend $800”

  1. Money Hacks Carnival #13 — Money Saving Hacks Edition | Moolanomy on May 21st, 2008 4:32 am

    [...] How Credit Card Purchase Protection Saved My Friend $800 posted at Sound Money Matters — Aryn shares a good story about credit card…see, credit cards can save you money [...]

  2. Jeff Clair on May 29th, 2008 5:24 am

    Aryn, it’s interesting.

    Frankly, there is a negative outlook regarding credit cards only as they played a major role in increasing debts. But, I also agree with you that if we used them wisely for purchase protection warranty benefits, we would protect ourselves from certain unwanted expenses.

    Jeff Clair

  3. Ultimate Collection of Credit Card Posts (Ask Mr Credit Card’s Blog) on July 30th, 2008 10:58 am

    [...] You should check out the about us page to find out why Aryn from Sound Money Matters started her blog. She has a very interesting credit card post on how the purchase protection feature in credit cards saved her friend $800. [...]

  4. rachel on December 9th, 2009 3:20 pm

    I purchased doors from a company in atlanta. They took 75% upfront and then showed up with doors that were the wrong finish. After some back and forth about who should pay to refinish it, the merchant said he would just give me back my 3 installs. After much debate and given no other options, I agreed. He loaded up his stuff and took off without paying me. I now do not have the merchandize or the money. I had charged the install on my citibank mastercard. Citibank clearly told me before I entered into this transaction that, if I can show proof that I am not in possesion of the merchandize, I would not be responsible for the charge. Accordingly I took a chance with an internet purchase. I filed a dispute but citibank now tells me that mastercard has denied my claim and that I should look into other options. what kind of credit card protection is that??? Can i sue them If I have proof of my converstions with them.

  5. Aryn on December 9th, 2009 3:50 pm

    Hi Rachel,

    If Mastercard denied your claim, you may have to sue the door merchant in small claims court. I agree, though, that the protection is ridiculous. I would also file a report with the BBB and whatever consumer protections Georgia offers. Maybe the attorney general?

  6. rachel on March 5th, 2010 3:41 pm

    the suit amount is over 10,000. So I Cannot do small claims. I did file with BBB

  7. Aryn on March 5th, 2010 5:10 pm

    For that much money, it’s worthwhile to hire an attorney and sue in regular court. Look for a general practice attorney who can either represent you or who can refer you to someone who can.

  8. Don on February 22nd, 2011 9:09 pm

    I agree with Aryn, Talk to an attorney. Some Attorneys will give you a free “consultation” visit,, But in this case I can understand where CITIBANK is coming from, the proof they need is .. the agreement with the merchant in writing

    In the future always get everything like this in writing, (and make sure it is signed) It can save you big bucks in the long run. As someone who worked for a furniture store I can tell you we never ever signed off on a receiving or shipping invoice unless we inspected the merchandise first, and if anything was damaged or it was the wrong item, size, color & so on we refused to sign off, but instead wrote not accepting delivery of item and returning to manufacturer due to whatever reason. (and always kept a copy of the invoice (after noting the above) for the stores records. This process has saved the store thousands of dollars regularly

  9. Julie on February 26th, 2011 2:43 pm

    If you charge a lot, it’s fully worth it to get a Platinum AMEX. If *anything* happens to your purchase they will completely refund you – no police report or evidence of any kind needed. You can leave you new $3000 video camera in a cab and they will refund you!

    I had horrible experience with Chase Mastercard telling me that they’d refund the cost of botched fliers if I paid to Fed-Ex them back to the merchant. I called back and was told that no, the other rep was wrong, and they’d just open a dispute. The merchant lied and said I never returned them and they gave me a proof (both of which I have hard proof that he was lying), and yet they let him keep the money (almost $1000) without telling me why – until I went through several phone calls. Now I’m out the fliers and the Fed0Ex charges! Unreal.

  10. Michelle on April 10th, 2012 10:22 am

    I had my iPhone lost/stolen, and I made the mistake of telling Visa that I thought it may have happened while I was flying on a Delta airplane. They informed me that they did not cover anything if it happens on a “vehicle”. Specifically “items lost or stolen from, in, or upon vehicles.” I said I thought this type of exclusion was meant to avoid people also filing a claim through their auto insurance and was informed that an airplane was a vehicle because it transports people. Really? I didn’t know that….

  11. Aryn on April 12th, 2012 10:20 am

    Wow, that is pretty ridiculous. It’s not like you have airplane insurance!

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