Credit Card Perks: Extended warranty and purchase protection

This article has been updated from a previous version. 

When you read the fine print on credit cards, you might notice the terms “extended warranty” and “purchase protection.” Sometimes referred to as extended protection, purchase security, or purchase assurance.

Most people glaze over these perks and focus on credit card points or rewards associated with the card in question. There’s nothing wrong with that, but you should be paying attention to extended warranties and purchase protection, too – they can come in handy and save you money on big-ticket items.

Extended warranties operate alongside manufacturer warranties, and purchase protection provides assurance for theft and damage.

What is an extended warranty?

Often when you purchase a product, you will receive a complimentary manufacturer’s warranty, which protects the consumer from having to pay for product defects and malfunctions for a short window of time. Extended warranties are available from your credit card provider to extend the existing manufacturer’s warranty. If you purchase a product that doesn’t have a manufacturer’s warranty, an extended warranty will not apply.

An extended warranty will only cover products purchased using your credit card. Some credit card companies require you to register the product with them to be eligible for the coverage. Lastly, if you cancel your credit card used to make the purchase, you may not qualify for the extended warranty benefit later.

How does extended warranty coverage work on your credit card?

When the manufacturer’s warranty on your product expires, the extended warranty offered by your credit card kicks in. The extent of additional coverage offered depends on the credit card. Also, the extended warranty will only cover the same components of the product included in the original manufacturer’s warranty.

For example, if you purchase a smartphone with a CIBC Aventura® Visa Infinite* card and the battery is faulty, a manufacturer’s warranty would typically cover the cost (manufacturer’s warranties usually cover the cost of flaws or defects resulting from factory installation).

However, let’s say your manufacturer’s warranty only lasts one year. A year and a half later, your phone battery breaks down. At this point, your credit card provides financial assistance through their extended warranty because the manufacturer’s warranty expired. The BMO CashBack World Elite* Mastercard*, for example, offers two years of warranty.

Some extended warranties are not limited to only items you purchase for yourself. They also cover gifts you have bought for others. The specific offerings will vary by the credit card issuer and may have different terms and conditions.

If you would like to make a claim using your extended warranty, contact your credit card issuer or refer to your certificate of insurance (available online if you didn’t save it). They will likely request supporting documentation such as a record of the purchase and the original manufacturer’s warranty.

Read more: How to use credit cards to save money and tackle holiday debt

What is purchase protection?

Usually, if you make a purchase and the item gets damaged or stolen, often that is your loss, and there’s not much you can do about it. This is because most products do not come with insurance. Even if it does, you are usually required to pay extra to obtain insurance coverage.

Purchase protection is a form of insurance that safeguards products against theft or damage for a specified period. Purchase protection is provided by your credit card company, which means that the duration and amount of coverage may differ depending on the credit card you use.

How does a purchase protection policy work on your credit card?

To take advantage of purchase protection, you must have purchased the product on a credit card that offers purchase protection insurance. Otherwise, you will not be eligible for an insurance claim if your product becomes damaged or stolen.

If you have to file a claim for a stolen or damaged product, contact your credit card provider. Be prepared with back-up documentation to support your claims, such as a record of the purchase, or police report.

As a general rule, you should always keep receipts for big-ticket items and be able to match them with the credit card statement.

What is the difference between purchase protection and extended warranty?

Both purchase protection and extended warranties provide the consumer with additional assurance for their product purchases. Both require the product to be purchased with your credit card to take advantage of these perks.

The main difference between purchase protection and extended warranty is the coverage. Purchase protection covers a broader array of damage, whereas extended warranties are limited to the coverage within the original manufacturer’s warranty.

Furthermore, purchase protection covers theft and damage, whereas extended warranties generally only cover manufacturing defects.

Related: How do cashback rewards work on a credit card?

A word about the fine print

The fact of the matter is the devil is in the details. In other words, the fine print will give you all the details on purchase protection and extended warranty coverage.

When considering a big purchase, be sure to read the fine print so that you’re aware of your credit card’s purchase protection and extended warranty policies.

Depending on what big purchase you’re making and what kind of coverage you require, it can help guide your decision on which credit card to choose, too.

It will be more challenging to take advantage of these perks if you consider them as an afterthought. Lastly, making a claim may be a challenge as you may have overlooked the necessary documentation or requirements to make a claim.

Make the most of your purchases

Most credit card providers offer purchase protection and extended warranties, yet many people do not take advantage of these additional coverages. If you plan, you could save money on a repair or replacement purchase.

Make the most of your credit card perks by reading the fine print and preparing to make a claim if necessary.

Read next: In what situations can your car warranty become void?