DEFINITION of 'Price Protection'

Price protection is a little-known but common feature offered by most credit card companies that 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.

BREAKING DOWN 'Price Protection'

To receive the refund, you must file a claim with the credit card company whose card you used to buy the item. You must also prove the new, lower price. For example, you can prove the new price by providing a printed advertisement showing the same item and the lower price. Each credit card company will have slightly different program stipulations. There may be a refund limit per item as well as a refund limit per year (such as $250 per item and $1,000 per year).

Some credit cards exclude internet purchases from their price protection offers. Furthermore, the lower price that is being used for comparison often times cannot be from an internet auction, where pricing might start low but change drastically before the buyer has a reasonable chance to purchase the item.

How Price Protection Can Vary Among Credit Card Companies

There might be specially allowances instituted on specific types of lower prices that other companies might not honor. For example, a credit card company might offer price protection refunds if the item is found at a discounted price at closeout, liquidation or going-out of-business sales, though the amount could be much smaller, with maximums of $50 per claim and up to $150 per year, compared with other refunds.

Price protection is not always an automatic service, even from creditors who offer it. It may be necessary for the cardholder to register items that would be under the service in order to let the company monitor for price changes that would warrant a refund. In such instances, the credit card company would search the internet for possible lower prices and then issue refunds where warranted. Conversely, the credit card company might automatically highlight “big ticket” purchases that would be potentially good candidates for the price protection program. From the credit card company’s perspective, this service may encourage consumers to use their cards more regularly, as there is the increased potentially to get a refund through the company as they make more purchases.

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.

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