How Credit Cards' Extended Warranty Coverage Stacks Up

Rewards credit cards are known for offering cardholders perks such as cash back and points that can be redeemed for airline tickets. But plenty of standard credit cards also offer benefits to cardholders, many of which consumers might not be aware. Among these little-known perks is extended warranty protection.

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Thirty-one percent of consumers buy extended warranties each year, according to a study by the University of Maryland’s Robert H. Smith School of Business. However, the four major credit card networks -- Visa, MasterCard, Discover and American Express -- provide up to a year of extended warranty protection for some cardholders, according to credit-card comparison site CardHub.com.

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“Unbeknownst to most consumers, credit cards offer extended warranty protection on many of the very things they are used to purchase," says CardHub.com CEO Odysseas Papadimitriou. However, consumers need to be aware that each card network's plan has its own caveats and exclusions, he says. Some offer better coverage than others -- something consumers should keep in mind when choosing a credit card.

CardHub.com examined the extended warranty policies of the four major card networks and scored them based on the likelihood of coverage, the scope of their warranties and their claims process. Here are the results of its 2012 Credit Card Extended Warranty Study:

American Express scored the highest (90%) because all cardholders are eligible for its extended warranty plan, which extends the terms of a manufacturer's warranty up to a year on warranties of five years or less and covers refurbished items. Visa scored the lowest (67%) because only certain cardholders are eligible for coverage.

American Express and Discover are the only networks to provide coverage to all cardholders.

MasterCard does not limit the number of claims that can be filed over a certain time period (but does limit coverage on each claim to the actual amount charged or $10,000, whichever is less). Visa caps coverage at $50,000 over a cardholder's lifetime, and American Express and Discover limit coverage to $50,000 per cardholder per year.

MasterCard is the only network that excludes any physical damage to an item from its coverage. American Express excludes physical damage to the extent that it was caused by a natural disaster or power surge or wasn't covered under the original manufacturer's warranty.

All networks require cardholders to keep their receipts to be eligible for an extended warranty.

None of the networks provides a warranty on items that don't have an existing manufacturer's warranty.

To see the full study, visit CardHub.com.

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Cameron Huddleston wrote the daily "Kip Tips" column for Kiplinger.com. She joined Kiplinger in 2001 after graduating from American University with an MA in economic journalism.