An Overview of Credit Card Perks

While many consumers use their credit cards as short-term loans or an easy way to pay, many popular cards provide consumer benefits and protections that most people overlook. 

To find out what benefits your card provides, start by looking over your credit card’s terms and conditions. Most banks send a guide to benefits in the mail, too, but you can usually find the same information online.

Note: For most of these services and perks to take effect, cardholders must have made the relevant purchase with their card. When that toaster you bought with cash breaks down one day after the manufacturer’s warranty expires, don’t expect your credit card issuer to treat you to an extra year of warranty protection. 

Here are some of the most important credit card benefits available today, and how they work

 

01
Purchase Protection

This insurance coverage will replace stolen or damaged items you purchased with your credit card. For example, say you buy a microwave oven with your credit card and it stops working a few weeks later. Purchase protection will cover it. 

This coverage varies by card, so see your card’s benefits guide for the details. A top-tier card might offer coverage for 120 days after purchase with a cap of $10,000 per claim and an annual limit of $50,000. That’s a lot of broken microwaves.

02
Extended Warranties

This perk extends the manufacturer’s warranty for a set period of time—usually at least another year and sometimes longer.

For example, you might get an additional 24 months under warranty on eligible items. Coverage is good for up to the amount you paid for the item, the cost to repair or replace it, and usually there's a cap, such as $10,000.

03
Auto Rental Collision Damage Waiver

Many credit cards, and especially travel credit cards, offer rental car coverage that is secondary to other insurance you may have. That means the credit card’s coverage will only payout if your insurance does not cover the loss completely. This coverage can vary in scope, so check the benefits guide.

At least one top tier card provides primary coverage—it pays out before your own insurance does. This is a rare perk. The coverage amount on that policy is up to a whopping $75,000.

04
Trip Cancellation/Interruption Insurance

This coverage kicks in when a trip paid for with your card is cancelled or delayed due to inclement weather, an injury or illness, or other factors beyond your control.

A good example is a policy that will reimburse prepaid, non-refundable travel expenses in amounts up to $1,500 per person and $6,000 per trip.

05
Guaranteed Returns

Guaranteed return coverage works like it sounds. If a store won’t take an item back you paid for with your credit card, this coverage can reimburse you for the amount you paid. 

Details vary, but you might expect guaranteed returns on items purchased within 90 days, for up to $300 per item and with a maximum of $1,000 in claims per calendar year.

06
Cell Phone Protection

Cell phone protection will reimburse you if your cell phone is stolen or damaged. The catch? Usually the policy only goes into effect if you pay your cell phone bill with your card. 

Some policies include deductibles (say $100) and most cap individual claims at $600 or so, and the number of claims you may make in a 12 month period.

07
Lost Luggage Coverage

This coverage will reimburse you if your luggage is lost by a common carrier like an airline, bus company, or cruise ship as long as you paid the fare with your card.

At least one top-tier travel card covers not only the cardholder but also family members—even if the cardholder isn’t traveling with them.

 

08
Baggage Delay Insurance

Where lost luggage coverage reimburses you if your luggage is lost and never returned, baggage delay coverage reimburses you for out-of-pocket expenses you may pay when your luggage is delayed. You have to pay for the common carrier fare to qualify for this coverage, but it’s usually good up to around $100 per day, for a few days while the carrier gets your stuff back to you.

09
Free Checked Bag(s)

Many airline co-branded credit cards, and some travel rewards cards, will the cover the cost of your checked bag (or bags) when you pay the fare with your card. A few will cover more than one bag and even the bags of your fellow travelers.

10
Airport Lounge Access

For frequent flyers the airport lounge offers a bit of respite and comfort from the daily travel grind—and if it’s free, it’s that much more comfortable. Co-branded airline credit cards often provide this perk as do several of the higher value travel rewards cards. Some extend free access to the cardholder’s traveling companion(s), while others charge a fee (in the $25-$50 range).

11
Travel Accident Insurance

Many credit cards offer travel accident insurance that kicks in if you pay for your common carrier fare with your credit card and face loss of life or accidental dismemberment. This coverage may be good for up to $500,000 (and even up to $1 million with some cards), although you may only receive partial benefits depending on your exact injuries.

 

In a typical policy, for example, you might get up to $500,000 in coverage for loss of life and accidental dismemberment, but you only get 50% of the policy amount if you lose only one hand or one foot or you lose your sight in one eye instead of both.

How to Get the Most Out of Your Credit Card’s Benefits

If you noticed any recurring trends among the credit card perks we’ve listed here, it’s probably that you have to pay for items with your credit card to qualify for coverage. If you’re hoping to get travel benefits like trip interruption/cancellation insurance, you need to pay your common carrier fare with a credit card that offers this perk, for example. Likewise, having guaranteed returns or purchase protection on one of your credit cards won’t do you much good if you never use that credit card to buy anything.