Credit Card Refund Protection

When choosing credit cards with refund protection, you need to compare them carefully to ensure good value. Important factors to use in the comparison include:

• Annual fee: Cards with complimentary benefits like refund protection typically come with an annual fee. Compare the fee with other cards’ fees to make sure that you are getting value for money.
• Interest rates: This is the main factor for many cards, especially if you expect to run an overdue balance on a regular basis.
• Interest-free days: If you usually pay off your balance in full and on time, thus avoiding interest charges, compare the number of interest-free days offered per month.
• Rewards program: Some cards that come with refund protection are connected to a rewards program. With such cards, you will get refund protection on purchases made, as well as earning points for making those purchases.
• Other benefits: Check to see what other benefits, such as overseas travel insurance or free flights, are offered by a card with refund protection and competing cards. Other benefits may be far more useful to you than refund protection.
• Cover provided: Read through the terms and conditions to understand the limits and restrictions on the refund protection. They may differ between providers, and if you make a purchase outside the card’s approved limits, you need to be aware of this at the outset.

There are numerous pros and cons, as you would expect.

Advantages

• Simple claims procedure: It’s relatively straightforward to make a claim. You need to provide your receipt for the purchase and fill out the claim form. Once your refund claim is approved, you should receive your refund fairly promptly.
• An extra layer of security: You gain the security of being protected against failed refund claims. While many stores have a good return policy, refunds are not always honoured. If the items you bought were expensive, you could be left out of pocket if the store refuses your refund claim.

Disadvantages

• Limitations: The main disadvantage with refund protection is that it is rarely all-inclusive. There is a limit on the amount of refund each cardholder can receive and there is also a limit on the type of product for which you can claim a refund. If you are buying an expensive item, or one of the ineligible items, you may not be able to get full cover.
• You get what you pay for. Although credit cards promote their ‘complimentary’ benefits, you will often find yourself actually paying for these privileges in the form of a higher annual fee. Check to see that you are actually likely to use any benefits that you are effectively paying for.

Refund protection cover is normally only one of a suite of insurance policies applicable to a specific credit card. You will normally have been provided with the terms and conditions of the policies when you first received your new card. Failing this, you can normally find a link to the insurance terms and conditions on the card’s web page.

You won’t see an additional fee on your credit card for refund protection. Refund protection cover is usually listed as a complimentary benefit. However, the cost of providing this cover is built into the total cost of the card, and unless the card has no annual fee, the cardholder will be defraying the card issuer’s costs to some extent.

You will need to fill out a claim form and provide a copy of the invoice and/or receipt for the item, showing that it was purchased using the credit card offering the refund protection cover. Under certain circumstances you may be asked to provide the item itself.

Some card providers (or their insurance underwriters) may be prepared to accept your credit card statement as proof of purchase, but you will be on shaky ground. It’s always best to retain the receipt for individual items over $50.

These situations are outside the scope of credit card refund protection. It is only meant to cover the return of new, undamaged items in perfect working order. If your item is damaged or faulty on arrival, you should normally be able to insist that the retailer accepts a return, under the provisions of consumer law. Items accidentally damaged after you have owned them for less than 90 days may be covered by a separate credit card purchase protection policy. Items which prove to be faulty after being used for a while may be covered by the manufacturer’s warranty.

No. Where the retailer has an established returns policy which is the same or better than the benefit provided by the credit card, you must first try to get your refund from the retailer.

Read your card’s terms and conditions for details of the dispute resolution process.