Why Credit Card Companies Are Cutting Some Benefits
Oct 9, 2018, 04:13pm
Bill Hardekopf Contributori
Opinions expressed by Forbes Contributors are their own.Personal Finance I recap the credit card industry. Iâm the CEO of LowCards.com.
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It was once standard for credit card companies to offer perks such as extended warranties, price protection and complimentary car rental insurance to their cardholders. Many of these extras are now disappearing, which is leaving consumers wondering why these benefits are being eliminated.
Lack of Use
One of the primary reasons card issuers are cutting perks is that cardholders aren't using them. Chase, Discover and Citi all cited "lack of use" as a reason to cut features. It costs creditors money to offer benefits, such as a best price guarantee, and if their card members aren't utilizing these services, there is no point spending the money.
Credit card companies have also stated they would rather spend money on programs that interest cardholders, such as cash back rewards, low interest and no annual fee.
However, the issue may not be a lack of interest in these benefits. It could be that cardholders do not know about the services offered by their credit card company. According to recent research from Marketing Strategies, 80% of consumers are unclear about the benefits that accompany their credit card, and 52% "know little or nothing" about additional credit card features.
Another reason credit card companies have dropped services, such as price protection, is the rise of third-party apps that automatically search the Internet for better deals on products. For example, when you purchase something online, Paribus and Earny both look for better prices on the items you purchased. If they find a better deal, you will be issued a refund. Earny takes a 25% cut of the refund, but Paribus is free. Since these services are automatic and easy-to-use, they are a better option than credit card price protection for many consumers.
What Benefits Are Disappearing?
Which perks are credit card companies dropping? As of February 2018, Discover stopped providing return guarantee, purchase protection, extended warranty protection, auto rental insurance and flight accident insurance. As of April 2018, Chase removed price protection, return protection and trip cancellation coverage. Finally, as of July 2018, Citi stopped offering roadside assistance, travel and emergency assistance and lost baggage protection on some of their cards.
Other major card issuers, such as Capital One and American Express, have not yet announced any cuts in cardholder perks, but it is possible this trend will take place with additional credit card companies.
If you are curious about the additional perks your credit card offers, log in to your account online or via the card company's mobile app to see the benefits you have. Many perks, such as flight cancellation insurance, can save you money when you travel, and benefits such as car rental insurance can keep you from purchasing additional insurance coverage when you rent a vehicle.
Provided by LowCards.com
I have been the Chief Executive Officer of Lowcards.com for the past 18 years. LowCards is a free consumer resource website that covers the credit card industry from every perspective. We wrote The Credit Card Guidebook, a free online book to help people navigate the complex...MORE
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