Choosing A Price Protection Credit Card
Sometimes referred to as price protection insurance, price drop protection or shopper’s protection insurance, price protection guarantee is a form of insurance cover that is often included within the complimentary suite of insurances offered on higher end cards, as well as some basic ones. It can also be included for an additional fee with other paid insurances, or available for a premium as a paid option on its own.
How Does It Work?
Price protection guarantee is designed to prevent cardholders from losing out if they see an item they purchased on their card cheaper elsewhere. While the small print will vary from card to card, you'll likely see the following conditions on your price protection guarantee cover.
Like For Like: If you want to make a claim, the item you found at a lower price must be identical to the item you purchased. That means it must have the same manufacturer, and exactly the same model number.
Location: In terms of location, the two items must be in Australia, and will typically be limited to bricks-and-mortar stores rather than online retailers. Some policies state that the price drop is limited to the same retailer, but can be in a different location. Other policies allow it to be from any store, but require the stores to be within 25km of each other.
Timeframe: Most policies put a time limit on each claim, so that the claim has to be made within a certain number of days of making the purchase. While some cards allow claims to be made up to 60 days after purchase, others place a limit of up to 21 days.
Cost: For the most part, there will be a minimum and maximum claim amount. Most policies require a price difference of at least $75, with the maximum claim limit typically ranging between $300 and $1,000. There is usually an overall limit that can be claimed within a year, and certain high-value items may be excluded, such as jewellery.
Proof: When making a claim, you will typically have to provide proof of the item advertised at a lower cost. In some cases, that may mean providing a printed catalogue provided by the retailer.
What Does It Offer?
Designed to offer extra cover on your card purchases, price protection guarantee ensures you don’t lose out if you happen to see an item at a lower cost after you’ve bought it. Let’s take a look to see how that might play out in real life.
Sam uses her card to buy a new coffee machine from Harvey Norman. She pays $500 for it and is pretty impressed with her purchase (and all the caffeine it provides).
Four weeks later, she sees exactly the same coffee machine on sale for $400 at The Good Guys. She checks the terms and conditions as set out by her card’s price protection guarantee and she can make a claim.
Her card requires items to have a difference in price of $75 or more, and located at bricks-and-mortar stores less than 25km from each other. The price difference on the coffee machine is $100, and the stores are 15km apart.
She makes the claim, providing the documentation required to the insurer, and she gets the $100 refunded back onto her card.
Is It Worth It?
While price protection guarantee may be one of those features you never really pay much attention to, it can provide excellent value on your card. For the most part, it’s included on your card as standard, and you don’t need to pay anything to make a claim.
With that being said, you will usually pay a higher annual fee on cards that offer features like these. But, if you make good use of all the features on offer, the higher annual fee may be worth paying.
In terms of opportunity to make a claim, that will depend on how much time you spend researching your purchases, before and after you make them. If you spend a lot of time researching your options before you buy, you will usually find the best deal available.
If, on the other hand, the item you buy unexpectedly goes on sale after you buy it, you would need to be aware of that happening. That may mean keeping an eye out online, or specifically checking back on prices after you make a big purchase.
As for the hassle of making a claim, it will depend on the payoff – and how much effort your insurer makes you put in. If you have to jump through near-impossible hoops each time you make a claim, you may be happier to take the hit on your wallet, even if you miss out on a few dollars.
However, if your claims process is simple – and you know where you stand in terms of what’s claimable and what’s not – price protection guarantee could be very valuable indeed. Overall, it will come down to choosing the right card with the right cover, then making sure you know how to use it.
Should You Pay For It?
While most cards that provide price protection guarantee offer it as a complimentary extra, some cards have it as an add-on feature that cardholders can opt in and pay extra for. As an add-on feature, it’s often known as shopper’s protection, but it works in much the same way as price protection guarantee.
In terms of cost, this will vary according to the card. As an example, let’s say your card charges 1% of your monthly closing balance for shopper’s protection, with a limit of $50 in place. If your closing balance is $1,000, the fee you would pay would be $10. However, if you clear your balance at the end of the month, there would be no fee for using the feature.
Just like complimentary price protection guarantee, paid shopper’s protection typically places limitations on claims. However, as this is a paid feature, you may find limitations aren’t quite as strict. Some shopper’s protection allow for claims until 12 months after purchase, with total claims up to $5,000 each year.
There are still some things shopper’s protection does not cover however, such as price matching, corporate discounts, pricing errors, items not in stock, online offers, closing down sales, precious metals and jewellery, and perishable items like food.
Comparing The Options
Time to compare your options? Here are some factors to consider when comparing cards with price protection guarantee.
Coverage: Find out how long after purchase you have to make a claim. Look for maximum and minimum claim limits, including overall limits for the year. Check for limitations on location, for example, whether the price drop needs to be with the same retailer, or whether retailers need to be located within a certain distance of each other.
Claims Process: Find out more about the claims process to see how easy or difficult it would be to make a claim. Check what documentation or evidence you would need to provide, and how much work you would need to put in to make a claim.
Cost: While many cards offer price protection insurance as a complimentary extra, others provide it as an add-on feature that comes with a fee. If it’s a paid feature, consider how much value it could offer, paying close attention to the limitations on the cover. If the fee is charged as a percentage of the monthly closing balance, you can avoid paying for it by clearing your balance each month.
Other Covers: Price protection guarantee often goes hand in hand with other retail covers such as purchase cover, which can provide cover on card purchases if they are lost, stolen or damaged within a certain period of time after purchase. Consider the value of these covers if they are also included on the card.
Annual Fee: Cards offering extras such as complimentary insurance covers tend to come with a higher annual fee. Think about whether this annual fee is worth paying for what you are getting in return. With that in mind, there are basic cards offering cover such as price protection guarantee – but they may not offer the same level of cover.
Interest: Again, cards with more features tend to have higher interest rates. If you always pay off your balance each month, this higher interest rate won’t affect you. On the other hand, if you carry a balance, your interest costs will quickly stack up, lowering the value of the features on offer.
Other Features: If you want more from your card than just retail insurance cover, find out more about what other features are on offer. Bear in mind bigger features tend to come with a bigger price tag, so be prepared to pay a higher annual fee.