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What Credit Card Protection Is and How to Use It: The Complete Guide

What Credit Card Protection Is and How to Use It: The Complete Guide
Jason Steele
Jason SteeleUpdated June 23, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Whether you tap your card to buy a coffee or key in your numbers to purchase sneakers online, using a credit card is actually one of the safest ways to pay. Unlike cash, which you can’t recoup once it’s lost or stolen, credit cards come with theft and loss protection. Many cards also offer added safeguards, such as purchase protection, price protection, and rental car insurance, for no extra cost. Here’s what you need to know about how credit card protection works, which benefits may come with your card (and which you may have to pay extra for), plus tips on how to keep your card and account information safe.Recommended: Top Rewards Credit Cards 

What Is Credit Card Protection?

Broadly speaking, credit card protection means safeguarding every aspect of owning and using a credit card. All cards come with fraud protection, which means that you won’t be liable for any charges should your card get stolen or compromised. Some cards also offer purchase protection, return protection, travel insurance, and/or rental car insurance. The exact benefits you get will depend on your card.Credit card protection can also refer to a specific type of insurance called “credit card payment protection.” This is an optional add-on program that allows you to suspend making any payments on your card should you experience a difficult life event, such as a job loss or serious illness. There is typically an extra fee for this coverage.

Types of Credit Card Protection

Depending on the credit card, you may be offered one or more of these protections for no added cost. 
  • Fraud protection Even if you’re extremely careful with your card (more on that  below), there’s a chance you could be a victim of fraud. Whether it be credit card theft, identity theft, or another type of fraud, you should not be liable for any charges that occur as a result. The Fair Credit Billing Act  limits your liability for fraud to $50. In practice, however, all major credit card networks waive that and offer a $0 liability policy (however, you should check your card agreement to make sure).
  • Return protection Some credit cards will extend the return window offered by a retailer. For example, if you attempt to return a product you’re not happy with within 60 to 90 days, and are rejected by the merchant, your credit card company might issue you a refund instead. 
  • Purchase protection If you buy something with your card and it gets lost, stolen, or damaged not long after, purchase protection allows you to get that item replaced or repaired, or get reimbursed, at no cost to you. The time window varies between 90 and 120 days after purchase, depending on the card.
  • Price protection If you buy something then later see it selling for less, price protection allows you to get back the difference. The price protection time frame will vary depending on the card, but is often between 60 and 90 days.
  • Travel insurance Whenever you’re traveling, there’s always a risk that something will get in the way of your plans. If your tickets and reservations are nonrefundable, you'll be out of luck. That is, unless you paid with a card that offers travel insurance. There are a variety of different types of travel insurance policies, but many cover trip cancellation or interruption and lost or damaged luggage.
  • Rental car insurance If your card offers rental car insurance, you may be able to opt out of a rental agency’s insurance package. In some cases, your credit card’s rental insurance will cover up to the cash value of the car for collision damage or theft.
Recommended: 8 Advantages of Credit Cards: Reasons to Use a Credit Card 

How Are You Protected With Your Credit Card?

All credit cards offer protection against inaccurate or fraudulent charges. Many cards also go above and beyond that basic protection and offer other safeguards, including trip cancellation insurance, price protection, and purchase protection. In addition, you may also be able to purchase payment protection insurance.

How Does Credit Card Payment Protection Insurance Work?

Many card issuers offer their customers credit card payment protection insurance (sometimes called “protection insurance” or a “credit shield”) for an added fee. This coverage gives cardholders the ability to stop making monthly payments on the card in the event of an unexpected event or financial hardship. It also allows them to stay in good standing with the three main credit reporting agencies.Depending on the policy, the plan may cover:
  • Disability that make you unable to work
  • Unexpected loss or reduction in income
  • Hospital stay of one or more nights
  • Divorce
  • The birth or adoption of a child
  • The death of a family member
  • A move to a new residence
  • Retirement

What Doesn’t Credit Card Protection Insurance Cover?

While credit card payment protection insurance covers a wide spectrum of life events it does not cover all of them. It won’t cover income loss due to criminal activity or incarceration, for example. The policy may also exclude other, more common scenarios, such as leaving your job to go back to school. If you’re thinking about buying this type of coverage, be sure to read the policy thoroughly so you know exactly what is and is not covered.

8 Tips to Keep Your Credit Card Safe

You can reduce the risk of credit card theft, loss, or fraud by taking some simple precautions. 

1. Practice Credit Card Protection From Day One

As soon as you get your card, be sure to sign the back. When choosing your PIN or password, avoid anything someone might guess, like your birthday, and make sure it’s different from you’ve used before. If multifactor authentication is offered, opt in. 

2. Keep Your Account Number Private

Don’t let others see your card when you’re out in public. Also, don’t give your account number over the phone unless you initiated the call. Be suspicious of anyone who calls, texts, emails, or messages you and requests your card number – banks will typically not ask for this information in this way.

3. Keep Your Information Current

To make sure your account information or credit card statement is never sent to the wrong person, make sure your contact information is up to date, including your email, cell number, home phone number, and home address. It’s also a good idea to sign up for suspicious activity alerts. That way you’ll know right away if any suspicious or fraudulent activity is occurring. 

4. Secure Your Devices and Networks

It may be convenient to store your credit card information on your internet browser, but it’s not a good idea. If someone accesses your computer (by stealing it or via malware), they will be able to access your card number. To ensure that your computer doesn’t save your card number automatically, turn off the Autofill function on your browser. 

5. Protect Yourself Online

Before you input your credit card information on a website, make sure the site’s URL has the extension “https” – the “s” at the end stands for “secured.” And, try to avoid making purchases or opening sensitive information using public Wi-FiAlso. One of the safest ways to pay online is to use a “middle man,” like PayPal, Apple Pay, Samsung Pay, or Android Pay. These services allow you to pay without submitting your credit card information. 

6. Check Your Accounts Often

You can easily check your accounts using your bank’s app, logging into your account online, or using their automated phone service. Another way to keep tabs on your accounts is to periodically review your credit reports from the three major reporting bureaus (Experian, Equifax and TransUnion Credit Reports). You can order a free report from AnnualCreditReport.Com.

7. Don’t Fall for Credit Card Protection Scams

Be wary of any person or third party company that contacts you offering to protect you against loss due to credit card fraud, hackers, or computer bugs – for a “low” monthly fee. Even if the person says they are from your credit card issuer's security department, don’t give them any of your account information. Instead, call your card issuer to find out if the plan is legitimate or, more likely, a scam.

8. Report Lost Cards and Suspected Fraud Right Away

If you can't locate your card, report it missing right away. The card issuer can block your card and account number immediately so that it can’t be used for purchases. They will also issue you a new card and new account number. Even if the card gets used before it gets blocked, you won’t be responsible for the charges as long as you report it missing in a timely fashion.

The Takeaway

Paying with credit is convenient. It’s also pretty safe. All credit card holders are protected from fraud. That means if someone steals your wallet or your account gets hacked, you won't be responsible for any charges that result. Many card issuers also offer additional financial protections, like rental car insurance, purchase protection, price protection, and trip cancellation insurance, for no additional cost. In addition, you may also be able to purchase a payment protection plan to cover your payments should you ever lose your income.If you’re in the market for a new credit card, it’s a good idea to research your options and compare rates, benefits, and other terms. With Lantern by Sofi, you can compare multiple credit card offers all in one place, and without making any type of commitment.

Frequently Asked Questions

Do credit cards offer protection?
What is credit card protection?
How can I get credit protection?
What is a payment protection fee?
Photo credit: iStock/AmnajKhetsamtip

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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