How Credit Cards Can Guard You Against 'Samsung Galaxy'-Like Fiascoes

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Samsung recently halted the production and sales of their Galaxy Note 7 phones due to safety concerns. Over the course of the last two months, news has spread of defective phones exploding - sometimes while in the pocket of a customer or on a plane. Luckily, Samsung has been fairly responsive to this whole situation. They have issued recalls and provided replacement phones to anyone experiencing problems. However, historically not all merchants or vendors have been as forthcoming with refunds for defective devices. In situations like these, consumers can guard themselves through a seldom talked-about perk on credit cards - purchase protection.

Whenever you charge a purchase to a credit card, you are afforded certain basic protections paid for by either the card's issuer or network. One of these benefits is called "purchase protection" and it's designed to help customers deal with issues after they completed a transaction. For example, if a tablet you bought with a credit card is damaged or stolen, many cards can refund your purchase up to a set dollar amount. The claim limit is usually somewhere around $600 - $800 per incident, with additional limits on the number of claims you can submit within a calendar year. Standard purchase protection can sometimes extend as much as 90 days after the original transaction. The case of Samsung Galaxy Note 7 phones would be well in the scope of most card refund time frames.

Sounds too good to be true? Well, there are some caveats. We can go over some of the most common ones, but it's always a good idea to read over your cardmember agreement. If you've long since thrown it out, you can request the issuer send you a new one - either by mail or electronically. Here are some things you may need to watch out for:

  • You need to try and resolve the issue with the merchant first. When you submit a purchase protection claim, the issuer may sometimes want to see whether you can get a refund through the store where the purchase was made.

  • Not all items will be covered. Most issuers have a long list of exceptions that don't fall under purchase protection. For example, if you bought a used item from Craigslist, and simply paid the seller using an app like Venmo, don't expect to get a refund.
  • If you lost it, you're out of luck. Purchase protection will not grant you a refund if you simply misplaced a purchase. The issuer likes to see that you were not at fault in whatever caused the damage/loss.
  • You don't necessarily need to have an excellent FICO score to qualify for a card with this type of feature. Even select student credit cards offer purchase protection and extended warranty coverage.

    This benefit is one of the main reasons it's a good idea to put big purchases, especially electronic ones, on your credit card. If your credit score is good enough, you can also get some money off the total price through cash back programs. These discounts can net you anywhere between 2% and 5% off the total purchase price.

    As always, you shouldn't completely rely on a benefit like this. It's better to think of it as a safety net, in case all other means to get compensation fail. You should not make risky purchases anticipating that your credit card company has you covered. Because there is small print involved, you shouldn't wager hundreds of dollars on everything going 100% smoothly.