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Credit Cards: Protection Against Misguided Gifts

Credit Cards
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The gist: Shopping with your credit card might give you better protection against broken or unloved gifts than merchants do.

Less-than-perfect holiday gifts (or, depending on your point of view, unappreciated ones) are as much of a holiday staple as incessant jingles and crowded malls. After the wrapping paper has been recycled (yes, recycled) and the leftovers eaten, you’re left with a pile of presents that, well, you just have no use for. You put them in your closet and plan to return them the next week.

And the next week.
And the next week.

And all of a sudden, that 21-day return window is past. Luckily, you’re not necessarily stuck holding on to that ugly sweater until you can find someone else to pawn it off on (“regift”). If the gift-giver used his or her credit card to make a purchase, the card network might just cover returns long after the merchant shuts his doors.

Return protection: Generally, if the merchant won’t accept a returned item within a designated time frame, the card network will reimburse you up to a certain amount (you have to give back the item, though). There are a lot of exclusions, but generally, they allow you to return clothing. Typically, exclusions include formal wear, seasonal items, software, and jewelry and watches.

American Express MasterCard Visa
Return Window 90 days 60 days 90 days
Coverage Limits $300 per incident
$1,000 per year
$250 per incident
4 claims per year
$250 per incident
$1,000 per year
Must provide
  • Receipt,
  • AmEx statement
  • Item
  • Receipt
  • MasterCard statement
  • Written documentation from store manager on letterhead documenting refusal to accept return
  • Firstborn son
  • Copy of store return policy
  • Receipt,
  • Visa statement
  • Item
Gotchas Excludes most electronics Store must have a return/exchange policy of at least 10 days Surprisingly comprehensive

 

Purchase protection: If you purchase an item and it is stolen or damaged (for a covered reason, of course) the network will reimburse you for the item. But, of course, exclusions abound: you won’t get squat if it’s stolen due to “lack of due diligence,” altered in any way, damaged by animals or insects, lost or “lost.” Also excluded are software and motor vehicles.

American Express MasterCard Visa
Coverage Window 90 days 90 days 90 days
Coverage Limits $1,000 per incident
$50,000 per year
$1,000 per incident
$25,000 per year
$500 per incident
$500,000 per year
Must provide
  • Receipt
  • AmEx statement
  • Proof of theft/damage
  • Receipt
  • MasterCard statement
  • Proof of loss/damage
Not mentioned
Gotchas Not mentioned Excludes damage by liquids, mold, power surges, product defects or acts of God Limited to theft, vandalism, water damage or weather

 

Warranty extension: If you purchase something that already has a warranty, the card network might extend it for a few years. Typically excluded items include vehicles, land, living things, perishables and pre-owned or used goods.

American Express MasterCard Visa
Extended by Up to 1 year Up to 1 year Up to 1 year
Coverage Limits $10,000 per incident
$50,000 per year
$10,000 per incident $10,000 per incident
$50,000 total
Must provide
  • Receipt
  • AmEx statement
  • Copy of warranty
  • Repair order
  • Receipt
  • MasterCard statement
  • Copy of warranty
  • Repair order
  • Receipt
  • Visa statement
  • Copy of warranty
  • Repair order
Original warranty terms Must be 5 years or less Must be 1 year or less Must be 3 years or less
Gotchas Excludes physical damage Excludes media such as CDs or DVDs, and failures due to “normal wear and tear” or power surges Excludes software

 

Summary:

Visa has the best coverage with the fewest “gotchas” and pretty high coverage limits. Visa benefits are also offered on a wide variety of cards, from the Visa Signature cards to some prepaid cards.

American Express is a close second, offering good coverage on American Express cards as well as co-branded ones, with few gimmicks.

MasterCard benefits are littered with potholes, and they ask you to jump through hoops to get coverage. Plus, their exclusions are ambiguous enough that it seems hard to make a clear-cut case that you should be covered.

Who’s missing? Discover is notably absent from this list. We haven’t found any similar benefits offered on a majority of Discover credit cards, which compounded with their other failures (they offer travel protections on very few of their cards, and their coverage outside of the US is limited) is a significant mark against them.