[Update: Some offers mentioned below have expired. For current terms and conditions, please see card agreements. Disclosure: Cards from our partners are mentioned below.]
You know that feeling after you’ve just bought a new cell phone. You hold it like a precious new thing; play with it like your new favorite toy. You’ve just paid quite a bit for it, or maybe signed up to be leashed into a contract for years. Yet, as shiny and new as the phone feels, it’s still an object you’re not accustomed to holding. You clutch it carefully, fearing that one buttery finger could drop it to the pavement and crack your lovely new screen.
But Let’s Say You DO Drop It
Oh no! After you’re finished freaking out about those sickening, splintery cracks spreading across your new screen, know that if you’ve paid for it by credit card, you’re likely in luck for at least part of your phone’s price. Many cards protect you with policies that can pay you $500 to $1,000 for the damage, within months of your date of purchase. You can look for what’s listed in your credit card contract under “Purchase Protection” or “Damage Protection” to see if you’re covered.
“The level of protection varies from card to card but the basic terms are that, if an item is stolen or damaged within X days (the X varies), then the card will reimburse you for the loss up to a certain amount per claim,” says Jim Wang, a Credit.com contributor and “chief money nerd” at WalletHacks. “The only other rule is that you need to use that card to pay 100% the cost of the item.”
For Visa, American Express and Discover, the limit is usually $500 per claim, up to 90 days after purchase. MasterCard usually allows up to $1,000 and is about a month longer – 120 days after purchase, Wang said. And some cards, such as Discover, will extend a warranty an additional year for those that are three years or less. If your current credit card doesn’t offer an extended warranty on phone purchases, it might be worth looking for a card that offers the benefits you want. You can compare credit cards and their benefits using our handy credit card finder tool.
“Not all banks and not all cards at each bank offer protection, so you might need to consider opening a new account to gain this benefit,” said Eric Lindeen, vice president of marketing for ID Analytics.
What Might Not Be Covered
It’s worth repeating — the perks are not universal — so you need to check the terms from the issuer of the card. That’s because issuers are able to customize coverage amounts, length of coverage, as well as incidents that would qualify for protection, says Megan Delaney of Visa’s marketing firm CBSI. In some cases, only certain thefts are covered. Other cards don’t cover mechanical or electrical failure. And cards typically don’t take responsibility for acts of God, like floods, either.
There are also certain exemptions on some purchases. “Like American Express doesn’t offer purchase protection on animals, plants, coins, stamps, antiques, etc. It’s a pretty reasonable list,” says Wang.
Other caveats — some cards, such as Discover, don’t cover phones that are stolen from vehicles, according to Discover spokesman Derek Cuculich. And you’ll have a hard time replacing your phone if it has a glitch but still rings. Most replacement protection will cover damaged or stolen, but not lost or failed devices, says Lindeen. “Most will not replace a device that can still make or receive calls,” he says. Stolen phones may require evidence, like a police report. And any other protection payouts, “from your carrier, home insurance, or AppleCare, must pay first,” says Lindeen.
What To Do
If you smash or damage your new phone, call your card’s benefits administrator immediately. “If you do not notify the Benefit Administrator within sixty days after the product failure, your claim may be denied,” says Betty Reiss, spokeswoman for Bank of America credit cards.
The benefit administrator will likely guide you through the process and send you a claim form. And, by the way, even theft, gifts and things you’ve bought but don’t really like could be covered. Just make sure you have all the necessary documents to prove your case.
When you buy your phone, it’s also a good idea to see if you need to register it with your credit card’s benefit administrator. The terms are generally sent to you after you receive the new card, Reiss says. You’ll also want to save the purchase receipt in case you’re asked for it.
What You’ll Likely Need to Submit Within 90 Days:
- The claim form sent to you by the benefit administrator
- Your card receipt
- The itemized store receipt
- A copy of the original manufacturer’s written U.S. warranty and any other applicable warranty
- A description and serial number of the item, and any other documentation deemed necessary to substantiate your claim (this includes bills and, if necessary, a copy of the maintenance record and receipts)
- The original repair order
- A police report if your phone was stolen
But What If You Didn’t Buy the Phone Outright?
If you purchased your phone on an installment plan with your carrier, there is an added opportunity for protection. “Cards are increasingly offering cellphone replacement insurance as an added feature,” said Lindeen. “You’ll need to pay your monthly bill with the card, so review your agreements and chose the card you use for your phone bill carefully. Reimbursements vary from $200 to $600, and most have a deductible.”
Wells Fargo may offer the most generous plan with $600 protection on up to four phones with a $25 deductible, and two claims a year allowed. You’ll need to read the fine print to see if your card offers this service. The protection is for damage or theft (but not phones that are lost), said Natalie M. Brown, spokeswoman for Wells Fargo. And, in case you’re thinking of intentionally getting absent minded and losing your phone to score some funds for that new iPhone, it also doesn’t cover phones that “mysteriously disappear.” Also check to see what’s offered under your card’s extended warranty.
Remember, you’ll get the best deals on everything from cellular service to credit card interest rates if you have good credit, which you can achieve by paying your bills on time and not carrying high credit card balances. A good credit score can end up saving you a lot of money over your lifetime. You can see how your payment history is affecting your credit by checking your two free credit scores, updated monthly, at Credit.com.
At publishing time, American Express and Discover products are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.