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5 Ways Credit Cards Protect Purchases

A sweater you buy for Christmas goes on sale for half price the next day. You might be able to get the difference back if you paid with a credit card.

The fine print in cardholder agreements often includes a number of protections overlooked by shoppers. Taking a minute to understand them could help you decide when to use credit instead of cash or debit.

If you can't locate a copy of your cardholder agreement or find the language too dense, call customer service to ask about the benefits that interest you. Be sure to get a full rundown on the terms and conditions too, since they can be extensive. There are usually deadlines for making claims and caps on how much money you can recover per claim.

Here are five relatively common protections:

1. Extended warranty. 

How It Works: It's tempting to pay for an extended warranty when making a big purchase. But you may already have comparable coverage through your credit card.

Card companies often extend coverage on purchases for up to one year depending on the terms of the original warranty. American Express gives an extra 90 days of coverage on a 90-day warranty. For a four-year warranty, the extension is for a year.

The cardholder generally has to make the claim. Some banks let gift recipients make claims as long as they have all the necessary documentation, such as the store receipt, a copy of the appropriate credit card statement and the original warranty.

Watch For: The extended warranty provided by the store or manufacturer may be more comprehensive or last longer than the one offered by your card issuer, notes Bill Hardekopf, CEO of LowCards.com.

2. Price protection.

How It Works: You splurge on an expensive gift for your spouse, only to see it heavily discounted a week or two later. Even if the store won't credit back the difference to you, your card company might.

With the Chase Sapphire card, shoppers can get the price difference back for up to 90 days. That's far more than most retailers allow. In addition to the original receipt, however, you'll need proof of the lower price, such as a sales circular or printed advertisement.

Watch For: The protection usually doesn't apply toward close-out sales and other special discounts.

3. Purchase protection.

How It Works: This is protection for customers if an item that doesn't come with a warranty breaks or is stolen. It typically lasts for a couple months after the purchase is made.

Depending on the situation, your bank might offer to replace an item, pay for its repair, or credit the amount of the purchase back to your account. There's usually a cap on the amount you can be reimbursed for.

A police report may be needed to file claims for stolen items. Lost items generally aren't covered. Antiques and collectibles usually aren't covered either.

Watch For: If the theft or damage can be covered by your homeowner's or auto insurance, the card issuer might require you to file a claim with those places first.

4. Return protection.

How It Works: If the deadline to return a purchase to the store passes, your credit card issuer might give you some extra time.

Many card issuers accept returns for 90 days after purchase as long as the item is still in new condition. There are generally caps on the value. American Express refunds up to $300 per purchase and cardholders are capped to $1,000 a year. Card holders generally need to ship the item to the card issuer, which then sells it online or elsewhere through a third party.

Refunds are generally credited to the account within two weeks or less if all the information is provided.

Watch For: You may need to pay to ship the item to your card issuer.

5. Car rental insurance.

How It Works: The cost of renting a car is often far higher than advertised because of all the add-ons at the counter. You may be able to knock at least one of those extras off the bill.

If you have a trip planned soon, it's worth calling your bank to see if you're covered in case of an accident. It's one of the more common protections offered on credit cards.

Watch For: The insurance provided by a card issuer may not be as comprehensive as you think. The insurance may cover against collision or theft, but not accident liability if you're sued.

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