Credit Card Benefits: Purchase Security vs Purchase Protection

Every time you get a new credit card, the card comes with a pamphlet called the Guide To Benefits. It tells you about the benefits that the card offers besides the rewards. Some common ones include the rental car collision damage waiver, extended warranty, emergency assistance, and roadside assistance. The latter two usually are just a call center dispatch. You still pay for the actual service.

Another common benefit covers an item you purchased with the card when it’s stolen or damaged in the first 90 or 120 days. Recently I had an opportunity to test this benefit.

I was taking a picture with my new smartphone when I dropped it and saw it tumble down a rocky mountain for 30 feet. The screen cracked. The charging port also stopped working. After the initial shock I remembered seeing ads on TV about the credit card coming to the rescue after a toddler damaged a new item a woman just bought. I thought “Luckily it’s still within 90 days!”

After calls to Bank of America and its contract benefits administrator, I found out how to file a claim. I filled out the claim form online, attached evidence of the purchase, pictures of the damage, and a repair estimate. A few days later I received a response: my claim was denied! The reason given was:

Coverage for the incident in which your item was lost/stolen/damaged is excluded from our policy.

I thought it must have been a mistake. Because I didn’t save the Guide To Benefits pamphlet my credit card came with I requested a new copy from the bank. After I received it and I read the fine prints, I had to agree with the benefits administrator: it wasn’t covered.

It turns out there are two similar-sounding benefits with different scopes of coverage. One is called Purchase Security. The other is called Purchase Protection. For any card program, the bank can choose to include either Purchase Security or Purchase Protection as part of the card benefits. If the bank is more generous it will include the broader Purchase Protection. If the bank wants to save some money it will include the narrower Purchase Security. Unfortunately even though the Bank of America Travel Rewards card is a Visa Signature card, Bank of America only chose to include the narrower Purchase Security benefit.

Purchase Security covers eligible items:

… in the event of theft, damage due to fire, vandalism, or accidentally discharged water, or certain weather conditions …

Accidental dropping or damages caused by a toddler are not included.

Purchase Protection covers eligible items:

… in the event of theft, damage or involuntary and accidental parting with property …

There are no extra qualifiers limiting the causes of the damage. It also includes “involuntary and accidental parting” which I read as fell into the ocean, etc.

I wish I had known this difference before I picked the card I used to buy an item more prone to damages. The difference in rewards would’ve been minimal. From my experience, American Express cards are usually more customer friendly in this regard. I will remember to use an American Express card to purchase these items.

Because banks pick different benefits for their different cards, you just have to find out from the fine prints which of your cards has the narrower Purchase Security benefit and which has the broader Purchase Protection benefit. Some cards post the Guide To Benefits pamphlet in online access. If you don’t see it you can call the phone number on the back of your card and ask for another copy.