Monday, 4 July 2011

The free perks that come with your card

by Rob d'Apice
Many premium credit cards come with a couple of really valuable extras: complimentary travel insurance (when you purchase return airfares with your card), extended manufacturer warranties, loss/theft insurance on purchased goods and free concierge services.

Now, before you say "Shut your mouth, Prosple! Cards with those services are only for the filthy rich!", many of these freebies can actually be worth much more than the additional annual fee cost that is usually associated with these cards. Let's go through each of the premium benefits one-by-one so you can understand just what you can get (and how much it can be worth to you).

1. Travel insurance

Many cards include complimentary travel insurance spanning anywhere from 3 to 12 months, if return airfares are purchased with your credit card. This is possibly the biggest benefit from premium cards depending on how much you travel.

For example, our dear friend Hugo is travelling to the americas for 6 weeks, spending most of his time in the US. Travel insurance with Covermore would cost Hugo $302, with an excess* of $250. However, if Hugo had the Westpac Earth Gold card, and paid for his flights with that card, he'd get a very similar level of insurance coverage free of charge, with an excess of $200. The annual fee for the Westpac Earth Gold is only $125, meaning he's saving $175 - PLUS Hugo will earn Qantas Frequent Flyer points on all purchases on the card (including the flights he just bought).

*For the less insurance-literate of us, an excess is an amount payable by you in the event of a claim. For example, if you lose a laptop during your trip worth $2,000 and need to claim back the amount on travel insurance, you will receive $2,000 LESS the excess of $250.

2. Extended Warranty

We're fairly public about our love for Apple products. One big annoyance, though, is the limited and expensive insurance available with the product - Apple Care for a Macbook can cost more than 20% of the laptop cost itself.

Hugo just told us that he has cancelled his overseas trip (and luckily hasn't lost any money on the insurance, since he got it for free from his card anyway), and has decided to spend that money on a Macbook for use with Uni studies.

He buys the $2,099 Macbook Pro, then ponders over the option to bundle in 'Apple Care' for $449. This will extend his warranty from 1 year to 3 years, and will provide him with technical support by phone for those three years too. His other option is to buy the laptop using his Westpac Gold card (annual fee $125), which will automatically extend the manufacturers warranty by 12 months.

Hugo does some more investigation and decides to upgrade his credit card to the Westpac Earth Platinum (annual fee $250) - this card provides an additional 24 months manufacturers warranty. So he's now receiving the same warranty as apple care for $199 less (PLUS he's earning even more Qantas points and can now get upto 6 months of travel insurance, instead of 3...)

Note that the extended warranty applies to all purchases with a warranty - it also covers the bed, fridge and TV that Hugo buys for his college room that year.

3. Purchase Protection

In his first week at college, Hugo gets uncharacteristically inebriated and his Macbook mysteriously vanishes. Unfortunately for him, theft is of course not covered by the manufacturer warranty.

But his Westpac card saves him thrice - the card comes with four months of free theft, loss or accidental damage protection (up to $125,000 of total claims covered per annum). This means Westpac insurance will replace his laptop at no cost.

Wait a minute, are you in bed with Westpac?

Nope. We've just highlighted it as an example here; in terms of insurance, however, it is one of the best value for money cards on the market (no other card has 24 months extended warranty, for example). Commonwealth Bank actually has the longest complimentary travel insurance policies on its platinum cards - up to 12 months.

So what's the best card for premium services? It depends a lot on you. Fortunately, our credit card comparison tool is well on the way: it allows you to filter cards based on these premium services. You can use the tool to find the card that saves you the most money, but that has at least 2 months travel insurance and 12 months extended warranty, for example.

Interested in being involved in our beta testing? Let us know now! We're currently building our beta testing database. NB: if you've already emailed - don't worry! You're on our list.

Anything else I should know?

Two important things to keep in mind:

  • Always compare the actual insurance policies available on each card. Claim limits and excesses can vary substantially between policies.
  • Always keep the receipt for your significant purchases. All insurance policies require that you have proof of purchase.

Have you ever used insurance or extended warranties that come free with your credit card? Let us know in the comments below!

1 comment:

  1. I needed to use the travel insurance on my Citibank Platinum card when the volcano erupted in Europe in 2010. The insurance was provided by Zurich Insurance - they were absolutely wonderful and paid out my claim in full. I wouldn't buy an international flight any other way than on a card with insurance.