Purchase protection, return guarantee among perks to go in 2018
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Discover is ending five card benefits for shoppers and
travelers that aren’t used much, the company says – but the changes won’t
happen until long after the holidays.
The card network and fifth-largest card issuer (by balances)
said it is cutting the following benefits: purchase
protection, return guarantee, extended product warranty, auto rental insurance and flight accident coverage.
Discover cuts benefits
- Purchase protection – no claims can be made after July 13, 2018. Insures damaged or stolen purchases up to $500 for 90 days after purchase.
- Return guarantee – no claims after May 29, 2018. Helps get money back on unsatisfactory items within 90 days, up to $500 per item and $2,500 a year.
- Extended product warranty – ends for purchases made after Feb. 28, 2018. Covers additional year after original warranty expires, for eligible items with warranties 36 months or less.
- Auto rental insurance – no claims after May 29, 2018. Secondary insurance for loss or damage up to $25,000.
- Flight accident – no coverage for flight purchases made after Feb. 28, 2018. Travel accident coverage up to $500,000 when buying airline tickets.
Not on the going-away list is price
protection, which refunds the difference in price if you spot an identical,
lower-priced item within 90 days of purchase. Discover’s price protection is
good for up to $500 per item with a ceiling of $2,500 per year.
Discover is not the only card issuer that has cut back benefits for shoppers and travelers in recent years. Visa and Mastercard, for example, began slashing return assistance and guarantee perks in 2014.
without affecting customers
The benefits are being ended “due to prolonged low usage,”
Discover said in a statement. The changes will affect all cardholders,
spokesman Derek Cuculich said by email.
The card company appears to be trimming costs without
rocking its customers’ boats too much, analysts said.
“They’ve done well in customer satisfaction – you have to
assume they’ve done some market research,” said Brian Riley, director of credit
advisory service at Mercator Advisory Group. He said it is significant that
Discover’s rewards program, which is relatively generous, is unaffected by the
changes. Discover is No. 2 in customer satisfaction in JD Power’s 2017 survey.
Time for a card
However, the cuts may mean it is time for some cardholders
to reevaluate their card lineup if the lost benefits are useful to them, said Riley. “Year-end is a good time to look at cards,” he said. “If you want
those features, maybe look at other products – not necessarily ones that have a
$450 annual fee.”
For example, Visa’s traditional benefits include auto rental
damage coverage, while its Signature
cards benefits include extended warranties for items that have warranties
lasting up to three years. Mastercard
standard benefits include accident insurance for travelers of up to $75,000 per person
when tickets are bought with the card. Mastercard and Visa already dropped return protection, but American Express still lists it as a perk for eligible cards.
Other companies to
scale back on card benefits?
“It’ll be interesting
to see how (Visa and Mastercard) react,” said Kevin Morrison, senior analyst at
Aite Group. The move could give them cover to scale back further on little-used
benefits, he said.
While these card issuers already cut back some card benefits a couple of years ago, they could also use the
move as an opportunity to hype their benefits more and maybe win over more
Discover users commenting on the FICO forum message boards
had mixed reactions to the news.
“Personally I don’t care as I would not charge anything that
would require any of those benefits to Discover,” said commenter “bz386.”
To which “kevinjjc” replied, “Not good, I won’t be using my
Discover card for big purchases.”
Said “Credit_hawk,” “They are axing a lot of them [benefits]
and I wonder how they intend to stay competitive when as some mentioned even
the most basic of cards offers these protections like 2nd party rental
insurance and purchase protection, etc.”
Discover to keep
In its announcement, Discover noted that it will continue to
offer and invest in free benefits including price protection, around-the-clock
account monitoring, FICO
credit scores and Social
Security number alerts for cardholders to check if their identifying
details are being passed around on risky websites.
“We will continue to offer and invest in the many free
benefits in which Discover cardmembers find the most use and value,” the
See related: Will identity theft monitoring be the next big card perk?, Compare credit card extended product warranties, Credit cards that offer free credit scores
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