Price Protection: Protects cardholders against a decrease in the price of the purchased product within a 60-day period. If the item you charged is later advertised at a lower price the card issuer will refund the difference.
Roadside Assistance: Offers cardholders emergency roadside and towing services 24 hours a day. If you encounter an automotive problem you simply call a toll-free number. Assistance is dispatched and any charges are automatically billed to your credit card. Trip routing services are also offered.
Auto Repair Protection: Provides refunds of automobile repair bills charged to cardholder's credit card if the repair proves faulty within 6 months or 6,000 miles.
Card enhancements gained popularity early last year when Citibank and Chase Manhattan added Purchase Protection, Extended Warranty and Collision Damage Waiver Coverage (CDW) to standard VISA and MASTERCARDs. Other card issuers, most notably AT&T's Universal VISA and MASTERCARD, followed suit.
Enhancements are designed to attract new applicants by creating the perception of added value. Therefore, credit card perks have far more marketing value than real value. For example, the Purchase Protection program which replaces destroyed, damaged, or lost credit card purchases, provides only secondary coverage. The cardholder's homeowner/tenant property insurance policy provides primary coverage. If another firm or individual is responsible for the loss, then the cardholder must peel through more layers of insurance before filing a claim under the Purchase Protection program. Likewise, Collision Damage Waiver Coverage appears as a valuable card benefit until you realize that rental car coverage is already provided under your personal automobile policy.
Citibank announced, April 1st, the adding of Price Protection to standard VISA and MASTERCARDs at no charge to cardholders. Under the program, cardholders are required to submit a proof of purchase (receipt and/or charge slip) and a copy of a printed advertisement (newspaper or magazine) listing a lower price. Limited quantity sales, bankruptcy sales, going-out-of-business sales, cash-only sales and closeouts do not qualify. Coverage is restricted to durable goods, not services, collectibles, works of art, or perishable goods. Cardholders have 60 days to locate a lower price and file a claim. Citibank is also limiting cardholder's claims to $250 per item with an annual ceiling of $1,000.
Another version of this program, called Price Guarantee, limits claims to $100 or 10%, whichever is less, and only applies to price reductions made by the same retail outlet. IAC of Colorado is offering the enhancement to banks for credit cards or checking accounts. So, you may hear more about this from your local bank.
VISA USA announced January 29th it was offering Roadside Dispatch to VISA issuers as an optional standard cardholder enhancement. VISA's program offers roadside assistance, towing, and a trip routing service. Cardholders call 1-800-VISA-TOW and receive an estimate of charges, name of the tow company and estimated time of arrival. All fees are billed to the cardholder's VISA account. There is also a fee for the trip routing service.
AT&T revealed a few days ago it is introducing a Roadside Assistance program for holders of the Universal VISA and MASTERCARD. AT&T's program goes one step further by offering a $10 certificate to cardholders waiting more than 15 minutes after the estimated time of arrival. AT&T will charge $18.00/yr. for the new service.
Card issuers would like you think so. But the bottom line for consumers is card cost: annual percentage rate, annual fee and grace period length. Credit card enhancements are basically window dressing. If you fall among the 32% who pay off card balances in full each month then seek a card with no-annual-fee and a 25 or 30 day grace period on purchases. If you are like most American cardholders (68%), carrying an average daily balance of nearly $1,600, then seek cards with interest rates around 14% and reasonable (under $20) annual fees. After locating the best appropriate deals determine if the issuer offers convenient, free customer service. Ideally the issuer should offer 24 hour access, toll-free, to the account service representatives. It can be terribly frustrating to make a long distance toll call during business hours only to be placed on hold for several minutes.
The final phase of shopping for a better credit card is weighing the various benefits or enhancements. If you narrow the list to a couple of banks offering similar pricing and service then start comparing the bells and whistles.
If you want all the bells and whistles, free, then consider applying for a VISA GOLD or GOLD MASTERCARD. A few are available with no-annual-fee and 25 day grace periods (see Page 7). Gold cards have minimum credit lines of $5,000 and require an annual income of approximately $30,000. One exception, Abbott Bank in Nebraska offers an enhancement-laden standard VISA and MASTERCARD with no-annual-fee and a 25 day grace period. Abbott does not set a minimum annual income requirement.
Credit card enhancements can change quickly or can be canceled. Limitations can be lowered and more restrictions can be added. A few months ago American Express modified its Purchase Protection program, shrinking the coverage to items under $1,000. Recently Corestates Bank in Delaware limited its 1% rebate on new purchases to revolving cardholders, excluding convenience cardholders (those paying balance off in full each month). The Price Protection offered by Citibank is being closely observed by the bank's financial fathers and by other issuers. Expect Citibank to make changes in the program as cardholders uncover loopholes or if few claims are filed.
If you're still turned on by the new card benefits, ponder the time worn adage: "there is no such thing as a free lunch". Adding enhancements to jazz up a credit card, costs real money, even if the perk is mostly fluff. Citibank charges a 19.80% A.P.R. and a $20 annual fee compared to an industry average A.P.R. of 18.52% and average annual fee of $16.81. Citibank's bells and whistles are subsidized by the above average pricing. On the other hand, USAA Federal Savings in Oklahoma offers a "plain vanilla" VISA and MASTERCARD with no- annual-fee, a 25 day grace period and a variable A.P.R. currently at 13.75%. The average revolving cardholder with a $1600 average daily balance would realize an annual savings of $117.
Switching to a lower cost card can translate into real dollar savings. As far as Price Protection and Roadside Assistance are concerned, consider shopping more carefully and joining the AAA. Ask salespeople if the item is going on sale soon and if it does, request a rebate. The Automobile Association of America provides a number of free services including towing and trip routing for one annual fee.
Remember credit card bells and whistles make noise, not bargains!
