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Going shopping? Why it’s safe to use your credit card over debit when you do

What to know when making use of ‘credit card purchase protection’ when you’re shopping



While credit cards often offer purchase protection and extended warranties, debit cards worldwide generally do not offer the same level of protection.
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Dubai: Credit cards are known to not only better your holiday shopping experience by providing rewards and introductory promotions, but it’s often overlooked how they beat using debit cards when making use of ‘purchase protections’ that only your credit cards offer.

“If you often keep interchanging between your credit and debit cards when you are shopping, you would be overlooking a key difference between credit and debit cards, which is the protections the former offers shoppers,” said Abu Dhabi-based consumer credit analyst Rajesh Markara.

“’Purchase protection’ is a common credit card benefit that allows you to file a claim with the issuer to receive replacement, repair or reimbursement for any eligible items. Major credit card networks, such as MasterCard and Visa, have different policies for ‘purchase protection’.”

What is purchase protection?
Several credit cards offer ‘purchase protection’, which is also commonly referred to as ‘damage protection’, acts as insurance against an item being damaged for a certain period of time after you buy it.

Depending on the credit card, the coverage amount and the duration of the protection may differ, but it roughly varies between $500 (Dh1,836) and $1,000 (Dh3,673) per claim and a maximum of $5,000 (Dh18,365) over a 12-month period. Some cards even offer coverage up to Dh50,000.

Typically, credit card purchase protection applies to purchases you make with your credit card for a specific amount of time. With this important coverage, you can be reimbursed for an item or receive a replacement if your purchase is damaged, usually within 180 to 365 days from the purchase date.

Debit cards don’t protect your purchases like credit cards

While credit cards often offer purchase protection and extended warranties, debit cards worldwide generally do not offer the same level of protection. If you face issues with a purchase, such as receiving a defective product, resolving the disputed purchase is challenging with most debit cards.

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“Whenever there is a possibility of disputes arising when shopping, making use of a credit card provides better protection and a more streamlined resolution process compared to relying solely on a debit card,” added Markara.

'Purchase protection’ is a common credit card benefit that allows you to file a claim with the issuer to receive replacement, repair or reimbursement for any eligible items.
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“A credit card’s purchase protection typically covers damage to a tangible item within a specific time frame from when you purchased the item. For an item to qualify for purchase protection, you must buy it with the credit card that is being used to file a claim under.”

How is this different from a credit card’s other benefits?
Purchase protection differs from other benefits offered by major credit card networks, such as price protection, extended warranty and return guarantee. While purchase protection offers coverage for accidental damage within a limited time frame, these are other typical card benefits worth noting:

• Extended warranty protection allows users to lengthen the time of coverage under an original manufacturer’s warranty. Extended warranty features cover the length of coverage and defects from the manufacturer, whereas purchase protection covers user damage.

• Return protection is a network benefit that extends the time consumers have to return an item. It also allows users to return an item even if purchased at a store with a no-return policy.

How to protect purchases with credit card purchase protection?

You’ve likely experienced ‘buyer’s remorse’ at one point or another. It can be for a number of different reasons, from being displeased with the quality of the product, to the vendor not delivering on what it promised.

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“When you purchase with cash or a debit card, your protections mostly rely on the retailer’s return policy. With a credit card you won’t be at the whim of the vendor, there are other avenues you can take to rectify your purchase,” explained Rupesh Naish, a debt manager based in Dubai.

“If you’ve used a credit card to buy something, you can call your credit card issuer to dispute the charge. Sometimes called a chargeback, this is where you contact your bank to notify them that a purchase was never received or arrived damaged.”

When you purchase with cash or a debit card, your protections mostly rely on the retailer’s return policy.
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This will typically mean filling out a short form, describing what you purchased, and why you aren’t satisfied with the purchase. This can also be done if you never received an item. The card issuer will then reach out to the vendor to follow up, and make a decision if you should be refunded.

What are the key limitations with ‘credit card purchase protection’ feature?
Not all purchases qualify for purchase protection, and exclusions can vary from issuer to issuer. If you plan to use your credit card for purchase protection, you should read through the fine print of your coverage to see which items do and do not qualify.

“Purchase protection programs have limitations on the types of purchases covered. Some examples of purchases typically not protected are perishable items; motorised vehicles; one-of-a-kind, antique or items previously owned; and rare stamps or coins,” added Naish.

“Additionally, fraud, illegal activity or abuse done by the cardholder are excluded from a credit card’s purchase protection programs, including the lack of diligence in keeping the item safe and theft from baggage not carried by hand.”
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3 tips for using credit card purchase protection

According to Markara and Naish, here are some tips to using credit card purchase protection when you are shopping:

1. Filing a purchase protection claim doesn’t always guarantee approval

If you file a claim that is denied, try calling your credit card’s customer service number. You can ask them why your claim was denied or about the process in general.

2. Always keep your receipts to raise your chances of getting a claim approved

With receipts, you’ll be better equipped to file for purchase protection or price protection. Having your receipts also lets you double check your credit card statements. So in the case of a merchant making a mistake and overcharging you, you can more easily dispute it with a receipt in hand.

Don’t forget that it’s usually credit cards that require good credit that will offer purchase protection.
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3. Not all credit cards offer purchase protection, only those that require good credit

Don’t forget that it’s usually credit cards that require good credit that will offer purchase protection. If you don’t qualify for such a card but you really want purchase protection, there are always a number of financial habits you can work on building to improve your credit score.

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Key takeaway: Is credit card purchase protection worth the cost?

There is a fee for ‘credit card purchase protection’, which will incur monthly. The cost generally depends on your monthly spending; the more you spend, the higher your fee. This cost can add up over time, so it’s important to consider whether you’re willing to pay.

Let’s say you opted for ‘credit card purchase protection’ which costs you Dh0.95 for every Dh100 of purchases. Assuming your swiped Dh10,000 in purchases during July is, the average daily balance is then calculated by dividing it by the number of days, which in July is 31. (Dh10,000/31days = Dh320).

Now, if the monthly cost of Dh0.95 for every Dh100, per day it comes to Dh0.0095. So then the monthly cost is Dh320 x Dh0.0095 = Dh3, which amounts to Dh36 per year, which isn’t much. However, for a rolling credit card balance of say Dh4,000 per month, the costs can pile on.

“’Purchase protection’ is an underrated yet valuable benefit offered on many credit cards. Knowing how to leverage this benefit correctly could potentially help you save thousands of dirhams per year,” added Markara.

“This is primarily because many of the major network issuers allow you to file claims up to Dh50,000 in a calendar year. You can speed up the claims process by providing all the necessary documentation, helping you gain your reimbursement as quickly as possible.”

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