Rewards like points, cash back and miles typically get applicants through the door for major credit card issuers. But side perks, such as price protection and purchase protection, have long been standard features on some of the best rewards credit cards.
That’s beginning to change, as Discover, Citi and Chase have all recently announced cutbacks in some of these extra cardholder benefits.
“This mass-catalog approach — where issuers offer cards with every feature you can think of — just isn’t working as well anymore,” says Mike Berinato, vice president of research and consulting for Market Strategies International, a financial services research and consulting company.
Here's what's been happening to side perks and what might come next.
Three major issuers have announced changes to ancillary benefits in recent months.
“This mass-catalog approach — where issuers offer cards with every feature you can think of — just isn’t working as well anymore.”Mike Berinato, Vice president of research and consulting for Market Strategies International
Discover recently eliminated extended product warranty, purchase protection, return guarantee, auto rental coverage and flight accident insurance from its credit cards, citing “prolonged low usage” of these features.
Citi plans to change its Price Rewind program on July 29, 2018, so that cardholders will enjoy price protection of only $200 per item (currently $500) and a maximum benefit of $1,000 per calendar year (currently $2,500).
And Chase has noted that as of June 1, the United℠ Explorer Card will lose both price and return protection, and that its trip cancellation coverage will be lowered to up to $1,500 per trip (currently up to $10,000 per trip).
Chase also no longer lists price protection as a perk on the landing pages of multiple other cards, although the issuer hasn’t officially commented on whether the benefit is indeed being removed on those cards.
Low usage, lack of awareness, little interest
Discover and Chase both cite a low rate of usage among cardholders, with a Chase representative noting of the changes to the United℠ Explorer Card that “less than 0.2% of cardmembers currently use purchase/price protection and trip cancellation benefits on this portfolio.”
Chase also says the changes aren’t attempts to cut costs, but “rather we’re reinvesting into the program on benefits that matter most to our customers and provide more value to the large majority of the portfolio (including those who spend a lot on the card).”
“A 2018 study notes that consumers care most about having a cash-back rewards program, no annual fee and a low interest rate. A perk like price protection is not high up on their priority list.”
Berinato agrees that these moves are not necessarily about issuers looking to shave expenses by shedding benefits.
“The question I have is how much awareness there is among consumers that [the price protection] benefit exists?” he says. “Removing price protection could just be a way to do a little bit of streamlining to focus on other benefits.”
In a February study, Berinato’s research firm found that 80% of credit card users are unclear about the benefits of their primary card. The study also notes that consumers care most about having a cash-back rewards program, no annual fee and a low interest rate, followed by 24/7 customer service and identity theft monitoring. So a perk like price protection is not high on their priority list.
It’s also worth noting that price protection isn’t the easiest perk to take advantage of. It can require a fair amount of legwork on the cardholder’s part, including monitoring and researching competitor prices, calling a claims department, and collecting and filing required documents such as receipts, advertisements and more.
Third-party tech solutions have made the task easier. The Earny app, for example, automatically searches for price drops on purchased items and files claims with the credit card issuer on behalf of the cardholder, generating refunds when eligible.
What’s unclear is whether the availability of such apps is helping to precipitate the decline of the very benefits they aim to help consumers enjoy by making the perks easier to use, and hence making issuer refunds more common. Aside from citing low usage, issuers aren’t elaborating much on their reasoning for scaling back on these benefits.
But at the very least, the ease of comparison shopping via web or app makes it relatively simple for consumers to find similar items across multiple sites, including potentially from “sketchy” retailers, and to submit claims that may not be reasonable.
Even reputable sites like Amazon show how easy it can be to price-check multiple sources, Berinato says.
When less can be more
If paring down little-used perks allows an issuer to reinvest in other parts of its portfolio, it could become a net gain for cardholders by sparking some innovation in a crowded market.
“Chase notes that while it’s removing some card perks, it’s also adding some valuable others.”
Berinato says he thinks about how these changes might lead to “a more targeted, sophisticated digital environment that offers more competition between products. That kind of setup will facilitate consumers finding better products out there and switching to different cards that suit their needs.”
Chase, for one, notes that while it’s removing some perks on the United℠ Explorer Card, it’s adding some valuable features, including expanded bonus categories, a Global Entry/TSA PreCheck statement credit and in-flight discounts.
As issuers reduce or replace some of their long-standing credit card benefits, it’s in cardholders’ interests to stay informed so they know what they’re entitled to — and whether it’s time to start looking for a different card.