Most people use credit cards for the ease and convenience they offer as replacement for carrying cash around for their purchases and other financial transactions. Almost all credit cards also award points for their use, which can be later redeemed for travel, purchases or other perks. But, in addition to accumulating and redeeming points, did you also know that some credit cards offer perks that can cover you during life’s little emergencies? Yes, a number of credit cards offer several protections for just using the card. Although some argue against the use of credit cards, because people lose track of their spending and are at risk of easily going overboard, don’t be too quick to discount some of the advantages to using them. But it should be noted that the kind of perks offered differ vastly and it is up to the consumer to figure out the best cards for their use.
It should be noted that your credit card’s coverages are only secondary insurance and are meant to be used as supplemental coverage and not as a replacement for more comprehensive coverage. Almost all coverage comes with exclusions and the terms of use come with stringent limitations and caveats. It is very important to read the fine print and be absolutely clear about the terms and conditions of coverage offered. The following is an overview of typical coverages offered by some credit cards.
Rental car collision insurance
Some credit cards cover collision repairs for a rental car if you have rented the car with your credit card. This benefit could save about $30 per day and you can decline your rental car company’s insurance. This benefit can provide you significant savings if you rent cars frequently.
Exclusions: Liability injuries when you cause an accident, theft of property from the car are not covered.
Travel accident insurance
Some credit cards offer what is called a miniature life insurance for buying your trip tickets with the card. If the unthinkable happens and you do not complete the trip alive, your credit card may provide a payout to your survivors.
Exclusions: Accidents occurring during travel to or from your everyday workplace are excluded. In general, anything other than loss of life or losing a limb is excluded.
Trip cancellation insurance
This occurs more often than we think. If an emergency or illness prevents you from using the nonrefundable plane tickets you purchased with your credit card, your card company may reimburse you.
Exclusions: If your trip is cancelled due to a pre-existing health or medical condition, you are not covered. Weather related interruptions are also excluded except in case of a handful of high-end cards that do cover this. Travel to war zones is also excluded.
Lost luggage insurance
Some credit cards may reimburse you for missed or stolen luggage. You’ll be eligible for up to $3,000 of coverage for the replacement of your lost luggage.
Exclusions: It is important to read the fine print carefully because credit cards that offer this perk also have a long list of items they don’t cover including sunglasses, traveler’s checks, skis, tennis rackets, hearing aids and cameras.
Cell phone replacement insurance
If you pay your cell phone bill with your credit card every month, your card issuer may pay for a new phone if you your phone gets damaged.
Exclusions: This coverage may be limited to damages and not for lost or stolen phones. Again, it is important to read the fine print.
In addition to these perks, some credit cards come with free identity theft coverage that will protect you against someone stealing your identity and racking up charges on your card. You will also get a couple of free credit checks each year. Some cards provide emergency cash disbursement and 24-hour card replacement. With all these perks, it certainly seems like a wise idea to own and start using a credit card that would match your lifestyle needs.
