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Plastic Perks
Cheap Charlie · August 11, 1999

Travelers should take a careful look at the benefits of their credit cards and travel and entertainment cards. MasterCard, Visa and Discover are credit and charge cards that allow payments for travel and purchases over a period of time. American Express and Diners Club are travel and entertainment cards that require full payment of the balance each month (except in the case of airline tickets, which may be paid for over several months with American Express).

This is the first of two columns exploring credit card benefits that most of don't even realize we have. Some of these benefits can be worth hundreds of thousands of dollars, others may mean a free air ambulance ride home if you get sick abroad.

These are more than tiny perks offered by credit card companies to get you to sign up. These are giant moneysaving opportunities.

Basically, credit cards can be used either to obtain credit and stretch the payment period or as a travel tool to allow additional flexibility and consumer protection. If you are planning on only stretching out your payments or for convenience when making purchases, just looking for the card with the lowest interest rate and annual fee is the main governing factor.

However, if you are looking at a credit card as a real travel tool, everything requires a different focus. In many cases, your annual fee pays for benefits that will make your travels easier than ever and provide additional insurance that compliments what you already own.

There is no way to cover all the fine print here. We only can provide a look at the most important considerations. As noted in previous columns, many corporate and individual credit cards provide collision damage insurance. But, American Express, Diners Club, Discover, Visa and MasterCard also provide an array of wide-ranging and quite valuable insurance coverage.

Not much has been made of this by the travel media. Conventional wisdom is that this coverage merely duplicate what you already have. But such wisdom can be very shortsighted when some of the benefits of gold cards and business cards are taken into account. Additional insurance coverage provided by various cards are impressive, and all are in effect worldwide unless specifically limited.

This week we cover some of the basic benefits offered by credit cards and travel and entertainment cards that cover life insurance, accident insurance and property insurance. The basic benefits that are most important to travelers are shown below. This coverage varies card by card and bank by bank -- read your cardmember agreement carefully.

Automatic travel accident insurance. This is life insurance, in many cases, with a severe injury insurance kicker. It comes into effect when travel on common carriers is purchased with a credit card. This insurance begins when you start your trip from your front door, if you are using public transportation. If anything happens to you, while using public transportation from the time the van or taxi picks you up to the time you return home, you are normally covered. This coverage comes into effect when you purchase your airline, train or bus ticket using a credit which has this automatic insurance.

Visa and MasterCard travel accident insurance is variable, but normally around $100,000 to $250,000. Discover pays out up to $500,000. American Express cards depending on the type have insurance ranging from $100,000 to $500,000. Diners Club travel insurance is for $350,000. Diners Club also provides this benefit when traveling on free tickets such as frequent flyer tickets. Coverage depends on the type of card you have and ranges from $100,000 to $500,000. Make sure heirs are aware of this additional insurance coverage. It can be a significant part of any estate.

Buyer protection benefit or Purchase Assurance. Once upon a time, this was offered by virtually every card to U.S. (the 50 states, D.C., Puerto Rico, and US Virgin Islands) cardholders. Visa has curtailed the protection (different banks issuing Visa cards include the coverage, others don’t), but MasterCard still offers it with most cards. American Express was the leader in creating this benefit and still offers it with all its cards. It protects any purchases made with your card against damage and theft for (normally) 90 days from date of purchase. This protection is limited to $1,000 per occurrence for most cards with a variable monetary limit per card (normally about $50,000).

This is often secondary insurance which pays after you have already been indemnified by your homeowner, auto or renter’s insurance. It is excellent for covering deductibles. It is also excellent for covering gifts purchases during your travels that may end up broken enroute. Items stolen from a car, whether left in the car or part of the automobile equipment, are not covered. Items stolen or damaged in checked baggage are not covered. Hand baggage is covered. Gifts purchased with the card that you give to others are also covered. Confiscation by customs officials is not covered nor are Acts of God, war or hostilities of any kind.

IMPORTANT NOTE: Stolen items must be reported to the police or an appropriate authority within 36 to 45 hours. Failure to get a police report will negate any coverage. Lost luggage coverage (American Express and Diners Club) This is rare coverage, but the top travel and entertainment cards, American Express Platinum and Diners Club, offer it to all members. The airlines once they have determined that luggage is lost, figure the actual cash value of your property. A suit you bought last year for $300 might only be worth, in used condition, about $100. Your favorite shoes you bought for $125 last spring might only be worth $25. You get the idea. It is just like an insurance company figuring losses after a fire.

After the airlines pay, the credit card company insurance comes into play. Diners Club provides coverage for $1,250 above and beyond the carrier’s indemnity. This coverage is based on replacement value of items. In other words, they will pay you what it will reasonably cost to replace anything lost by the airlines. You'll get your $350 for that suit and $125 for your lost shoes.

With American Express Platinum you are covered for up to $1,250 for carryon baggage and up to $500 over and above the coverage provided by the common carrier for checked baggage. Many of the American Express Corporate cards also include this lost luggage insurance coverage. With the normal American Express card you are covered for reimbursement up to $200 for delayed bags and up to $500 in excess of the airline’s liability if your checked or carryon bags are lost or damaged. You can also purchase additional lost baggage insurance. American Express coverage is for original cost.

Next week we look at travel assistance services offered by the credit card companies and how you can best use them.

Charlie Leocha is the Boston-based author of Travel Rights: Know the Rules of the Road and the Air Before You Go. Cheap Charlie appears every Monday on this site. E-mail him at cheapch@aol.com or access his Web site.