As much as I am an advocate for point-earning credit cards, sometimes there are more important considerations than your kickback.
One argument I’ve made on several occasions (such as here), is that international travel is a time to choose your credit card on the basis of fees, rather than rewards. (Ideally, you can get both, but most rewards cards slap hefty foreign transaction charges on your account.)
Another consideration is rental car coverage. Because of Visa’s more generous loss-of-use coverage in the case of damage to the car, I always use a Visa when renting.
But another rationale became clearer to me this past week: For expensive items, it can make sense to choose a card on the basis of its purchase protection.
Last week, our home was broken into and burglarized. The thieves took one item: a nearly-new high-end netbook, purchased just a few months ago.
After the police left the house (and after we cleaned up the CSI staff’s fingerprinting dust from our bedroom…) I filed a homeowner’s insurance claim. But I remembered that our credit card might be able to cover a part of it, and that the credit card might have been our only coverage had the computer been lost outside the home.
In the process, I was reminded of the variations between cards:
American Express Purchase Protection will cover the expenses of a lost, stolen, or damaged item if the incident happens within 90 days of purchase, up to $1000 per incident and $50,000 annually.
Visa Signature has a similar product, dubbed Purchase Security, but incidents are limited to $500 of coverage. The $50,000 annual cap still applies.
MasterCard’s Purchase Assurance is also limited to 90 days, but it’s not clear what the dollar limits are. You need to check with your card-issuing bank to see how large the benefit is. (In my own case, Citibank offers $1000 coverage per incident, with a $25,000 annual cap.)
I would rank those 1) Amex, 2) MasterCard, and 3) Visa.
(I remember when these programs lasted an entire year, instead of just 90 days. But times change, and benefits get shaved back.)
The computer that was stolen from me was bought with a Visa, and it isn’t covered, as it was stolen just over 100 days from the time of purchase (the credit card coverage had run out on day 91). Our normal go-to card, our Starwood Amex, or our Citibank MasterCard, wouldn’t have been any more help, given the 90-day limit. But if the crime had occurred a few weeks ago, the Amex or MC would have been the better cards to have used.
But for big purchases, the Visa just went down a notch in my estimation, and the Amex moved up.
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credit cards