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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February 1st, 2010 at 9:25 pm
Sorry to hear about the incident. I suspect the loss of the netbook is the least of the concerns.
February 1st, 2010 at 11:31 pm
Thanks, Oliver.
February 2nd, 2010 at 12:49 am
How does the extended warranty coverage compare between the three (and others)? I have a no-annual fee REI Visa with the Signature program’s extended warranty feature. Seems nice, although to be honest I’ve never had a need to test it out.
February 2nd, 2010 at 8:17 am
Brian,
A similar pattern holds. On the surface, the extended warranty features seem generally comparable between Amex, Visa Signature, and most MasterCards. They’ll all double the manufacturer’s warranty, up to one year’s extension. (MC seems to give the issuing banks the most leeway of the three, which leads to more variation. And Visa cards without the Signature label aren’t required to have the shopping benefits at all.)
But Amex’s warranty extension is valid on items that have up to a 5-year warranty, giving you a possible maximum warranty of 6 years. (I checked a few different Amex products, and they all shared the same terms.)
Visa Signature will only add a year for items with up to a 3-year warranty, for an effective maximum of 4 years.
And Mastercard is vague, referring you to your issuing bank’s terms and conditions; MC, however, doesn’t seem to limit this benefit to the “premium” cards.
February 2nd, 2010 at 11:20 am
Thanks for the information, very useful.
I’m actually currently going through an extended warranty claim with mastercard. Still waiting for them to acknowledge receipt of my documents. In my case, mastercard would only add 1 year of additional warranty for items with up to a 1 year warranty (effective maximum of 2).
February 2nd, 2010 at 12:29 pm
I’ve used some of these programs in the past, AMEX specifically. the rep I spoke with said, that less than 1/100th of 1% of THEIR revenues, goes towards paying things like rental car insurance claims, theft, warranty extensions, etc. Now, that was five years ago and the consumer is more savvy, but it may still be VERY low relative to the increase in use they generate.
That being said, I do not recall the LOSS, THEFT or DAMAGE being more than 90 days, let alone a year. What program was that with? warranty extension was always about 2x, but limits it for certain items now like PC’s and TV’s, etc.
February 2nd, 2010 at 7:11 pm
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February 3rd, 2010 at 2:13 pm
Sorry to hear about that, Mark.
February 4th, 2010 at 11:39 am
How annoying. Hope it all works out. As for the rental car coverage, unless I’m mistaken, Diners Club offers PRIMARY Collision Damage Waiver Coverage while Visa’s is secondary to your personal auto insurance policy. Not having to file a claim with and deal with deductibles from your personal auto insurance first (or possibly ever) should make Diners Club more valuable when renting a car, even if you have to fight for the documentation for Loss of Use coverage. And out of curiosity, how can the car rental companies charge Loss of Use without documenting actual loss of use?
March 22nd, 2010 at 11:12 pm
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