Balance Protection

Balance protection is a type of optional coverage that is offered on a credit card account. Credit card issuers offer balance protection to cover minimum monthly payments on the credit card if the cardholder is unable to pay due to injury or unemployment.

Balance protection is a type of insurance. The optional balance protection will provide minimum monthly payments to insure that the account does not default in the event that the cardholder suffers injury, loses their job, or dies. Typically, the fee for the balance protection is charged as an added fee to the monthly credit card statement. Balance protection is more expensive when compared to other forms of insurance, with the costs averaging around $1 on every $100 you owe. For example if you have a $5,000 balance, the balance protection would be $50 a month.  

Balance protection agreements differ from lender to lender, and vary wildly; it is important for an individual considering balance protection to research if it is necessary or beneficial for them. In many cases balance protection is superfluous and the cardholder may already be covered by other policies. A cardholder should look into their existing life or disability insurance or any salary continuance benefits at their place of work.

Return protection is a common, but little-known, credit card perk allowing cardholders to receive a refund for any item they purchase with the credit card that they are not satisfied with and that the merchant will not accept as a return. Return protection can be useful if the store's return period is shorter than the credit card's return protection period, for example if the store only allows returns within 30 days, but the credit card covers the purchase for 90 days. Often times return protections have a limit per item as well as an annual limit, such as $250 per item and $1,000 per year.

Another common feature of credit cards, price protection, allows cardholders to receive a refund if an item bought with that credit card drops in price within a specified time period. This time period is usually within 30 or 60 days, though some cards allow claims to be filed within 90 days. Not all credit card companies offer price protection, and those that do might only allow it for specific cards they offer or for particular types of purchases.

Most credit card companies also offer identity theft protection. Credit card issuers proactively monitor consumers’ accounts for possible signs of fraud, which is why you might sometimes have a large or out-of-town purchase declined.