Credit cards better than debit cards – sometimes

Credit cards have been 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. Credit cards can provide valuable purchase protections and insurance that are unmatched by cash and debit cards.

Yet, more consumers are forgoing these benefits and choosing debit cards instead of credit cards for payments. Total payment volume for debit cards
surpassed credit-card volume for the first time in 2009 and will continue to expand.

Consumers should understand their payment options before cutting up the credit card. There are times when using a credit card is your best choice for payment, especially for tickets and large purchases. However, insurance and purchase protections vary by card and issuer, so it is a good idea to research these when comparing credit cards.

Here are some of the extra benefits offered by many credit cards:

1. Car Rental Loss/Damage Insurance

With a number of 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 in excess of 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 designated 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. Price Protection

Price protection helps a consumer get the best price you can find on the products you buy. Many issuers will refund the price difference if you find a lower price on the same item from the same manufacturer within a designated time period (typically 60 days). Issuers 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. Purchase Protection

Purchase protection protects eligible 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 coverage is limited to up to $1,000 per occurrence, and up to $50,000 per cardmember account per policy year. It is in excess of other sources of indemnity.

If a retailer will not accept a return within the first 90 days of purchase, some cards, like Chase Sapphire, will reimburse you for the cost of the item purchased on your card.

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4. Extended Warranty Protection

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

Capital One doubles the original warranty time period and duplicates the coverage of the original manufacturer's warranty up to a maximum of 12 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 period 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 coverage will cover you and your dependents for permanently lost, stolen, or damaged bags while checked with your carrier. Coverage is secondary to the carrier's liability and applies after that coverage has been exhausted.

Coverage varies by issuer. Citi's coverage for checked bags is up to $3,000 per occurrence per covered person. American Express' coverage is up to $1,250 for lost, stolen or damaged carry-on baggage, and up to $500 for checked baggage (coverage is more for Platinum members). This is in excess of the Common Carrier's liability and includes up to $250 of coverage for high-risk items, such as computers, jewelry and electronics.

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 to your 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.


Some cards offer extras benefits:

Medical Prescription Replacement Assistance

If medications are lost or forgotten, some card issuers will help 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 make arrangements 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 a period of 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 for convenient towing and locksmith services in the US and Canada are 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

Reimburses you for personal property stolen from your hotel or motel room. Your hotel/motel stay must be purchased entirely with an eligible card. (MasterCard)

– Bill Hardekopf is founder of Lowcards.com, a credit -card information site.