How to use your credit card to protect your purchases
Whenever you make a purchase, you are taking a risk. What happens if the product is defective? Worried about making a purchase online? What if an order never arrives? Or a company goes out of business and you are unable to return an item?
If you paid with your credit card, you can use an option available to you called a chargeback. This is one of the protections that often come with credit cards. When you pay cash, you are entirely dependent on the retailer to refund you the money, unless you want to make a legal issue of the situation. It is also quite difficult to get a refund if you use a debit card for a purchase. The money is already taken out of your bank account, and getting it put back can be a hassle (and maybe even impossible).
With a credit card, though, you have the option to ask for a chargeback from the credit card issuer.
What is a chargeback?
A chargeback is the reversal of a disputed charge on your credit card. The card issuer can decide to refund your money, returning it to your card, and then pursue the funds from the retailer. However, it is far from a hassle-free transaction.
Before asking for a chargeback, you should first try to resolve the issue with the retailer or service provider. If this does not satisfy your complaint, your next option is to call the phone number on the back of your credit card and give them the detailed reason for your dispute. The bank will investigate your claim and, if the complaint is valid, refund the amount from your statement. Chargebacks provide a form of purchase insurance, which might ease some of the concerns people have about ordering items online and making other purchases.
Other protections offered by credit cards
Getting your money back when a retailer refuses to help you is not the only bonus of making purchases with your credit card. Many credit cards offer other purchase protections. Especially for cashback credit cards, it is common for one of the perks to being an extended warranty. An extended warranty is available at no charge to you and goes beyond the manufacturer’s warranty. Find out if your credit card offers an extended warranty automatically; if it does, you can be refunded the cost of an item that breaks before it should.
Some of the best credit cards may even offer a price guarantee. Some card issuers will refund the difference in price if you buy something and then find a cheaper version later. As long as you find the cheaper price within a set period of time (usually 30 to 60 days), and can prove that you paid more for it, you might be eligible for a partial refund.
Paying by credit card has a number of perks and possibilities. It’s important to read your cardmember agreement so that you understand the way your credit card can protect your purchases. You might be surprised at what you find.