Dear Credit Brain,
My wife and I have been looking into applying for a new credit card and there are many different types out there. One type that we’re considering is a frequent flyer card. The one that we found states that it comes with insurance that is activated when the card is used while travelling. Is the insurance that typically comes with this type of credit card valuable? We’re interested in the peace of mind that this insurance could offer but are wondering how commonly it is utilized or if it’s more of a sales gimmick.
We also have heard in the past that the insurance on some credit cards will cover you while renting a car. Is this true or just a misconception?
The Terms and Conditions regarding insurance policies can vary wildly, so my suggestion would be to read the Cardholder Agreement closely. Unfortunately there is no general way to address each card’s policies with a blanket statement.
Travel & Insurance Benefits may include:
· Travel Accident Insurance
· Delayed and Lost Baggage Insurance
· Emergency Travel Assistance Service
· Auto Rental Collision/Loss Damages Insurance
· Trip Interruption Insurance
Most bank credit cards offer reimbursement coverage for damage due to collision or theft up to the actual cash value of most rental vehicles. The benefit however, is often supplemental to, and excess of, any valid and collectible insurance from other sources. Also, you may want to note the amount of deductible.
Remember the time worn adage: “there is no such thing as a free lunch.” These added enhancements offer real benefits, but are reflected in increased APRs and fees.
If you pay your balance off in full every month, then go for it. Otherwise, find a no-frills card that offers a low interest rate and source your benefits elsewhere.