Price and purchase protection: credit card features to know about

Co-author: Dominic Beattie

Many credit cards offer features known as price protection insurance and purchase protection insurance, which provide financial coverage for customers.

What is price protection insurance?

Most of us have been in the situation where we’ve made an ‘impulse buy’ from a particular store before discovering that there was another store down the road selling the same item at a much lower price,  or after some time, the same store you bought from has drastically lowered their price for that item.

This happens far too often for many of us, but usually, we just say “c’est la vie” and assume there is nothing we can do about it.

That’s where Price Protection Insurance steps in. This feature allows you to seek a refund for this price difference.

Also called a Guaranteed Pricing Scheme or even Shoppers Cover, Price Protection Insurance covers consumers against the risk of being ripped off.

For example, you might have been caught up in the excitement surrounding the release of a new piece of technology and rushed in and bought that item on your credit card for, say, $500.

Some time later, when the initial excitement has died down, retailers are now selling that item for a drastically lower price of $300. Thankfully, your credit card has price protection, so you obtain proof of this price difference and claim a refund of $200.

The conditions of this feature can vary a lot. For some credit cards, the price drop has to be via the same retailer (but can be in a different location), but others might allow it to be from any store so long as they’re within a specified distance (usually 25 km) from each other. Also, the time limit to make this claim can range significantly, so make sure you check the terms and conditions on your card! Price protection can be a complimentary feature for some credit cards, but it may be an optional extra for other cards.

Here are some personal credit cards offering this feature (at the time of writing) and a brief overview of the different conditions attached to each. Please note that terms, conditions and exclusions will apply to all programs:

Source: Providers’ websites

Each card will have particular terms and conditions regarding which items are eligible and what evidence is necessary to prove this price difference, so be sure to thoroughly read the product disclosure statements thoroughly.

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What is Purchase Protection Insurance?

Purchase Protection Insurance, also called Purchase Security Insurance or Merchandise Protection, is insurance for the new products you buy with your credit card. It provides coverage for the items against loss, theft, or accidental damage, usually for up to 6 months from the time of purchase.

For example, if you drop a new phone you bought outright on your credit card and it breaks (and it’s not covered by a warranty or repair), with purchase protection you could make a claim for the amount you paid for that phone so you can buy a new one.

As with price protection insurance, the conditions regarding purchase protection will vary among the different credit card providers. This includes annual payout limits and limited payouts per item, as well as the length of time after purchase the items are insured for.

At the time of writing, more than credit cards on Canstar’s database state that they offer some form of purchase protection insurance:

There are additional conditions that may apply, such as payout limits per item and excesses you might have to pay. Some credit cards offer coverage for items purchased outside of New Zealand while others might not. Be sure to read the product disclosure statements thoroughly.

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