What is a guaranteed pricing scheme?
A guaranteed pricing scheme can help you get the cheapest price for items you buy with your credit card by covering the difference if you see it advertised for a lower amount elsewhere. Also known as price protection or a price guarantee, it's often available on credit cards that offer other types of complimentary insurance policies.
Requirements to use this cover usually include the distance between where you bought the item and where you see it at a cheaper price, the value of the price difference and what kind of purchase it is.
How do you use price protection cover?
If you have a credit card that offers some form of price guarantee, the cover will automatically be available to any eligible items you pay for with the card. As with any insurance, you need to meet some key conditions to make a claim. This typically includes:
- A limited time to make a claim. The time between when you buy something with your credit card and make a price guarantee claim typically ranges from 21 to 60 days from when you made the original purchase, depending on the card.
- Proof of the cheaper item. This is generally required to be a printed catalogue with a date that meets the time requirements for a claim.
- Item requirements. The 2 items need to be identical in terms of model number, year and manufacturer.
- Price differences. The cheaper item usually needs to be at least $75 less than what you paid.
- In-store purchases only. Price guarantee policies don't typically apply if you're shopping online.
- The location of the purchased and sale items. For example, the cheaper item may need to be from a store within 25km of the store where the original item was purchased.
- Other qualifications. Some card providers will allow you to claim for business or personal items, and others will limit claims to personal or business only. Some policies will also limit the value of the item to being no more than $10,000.
How much can you save through a guaranteed pricing scheme?
As long as you meet the requirements for cover, you can typically get a maximum price protection refund of between $300 and $500. Most credit card insurance policies also have a limit on how much you can get back from guaranteed pricing scheme claims over a year, such as $100,000.
To put this in perspective, here are some examples of when you could or couldn't use price protection cover:
Example 1: You buy a dress for $2,000 with your credit card and later that week see another local store advertising it for $1,800. If your credit card offered a price guarantee scheme, you could claim the $200 price difference.
Example 2: A few days after you buy a TV for $3,000, you see another store holding a huge sale where the exact same bed is priced at $2,000. Based on most complimentary credit card insurance policies, you might not be able to claim the full $1,000 difference due to claim limits. But making a claim could give you a way to save up to $500 compared to what you originally paid.
Example 3: You buy a new watch for $200 then see another store selling it for $150 two weeks later. In this scenario, it's unlikely you'd be eligible for price protection cover as the price difference is only $50.
Pros and cons
- Save money. A price protection or guaranteed pricing scheme gives you a way to save on items you buy with your credit card.
- Peace of mind. If you're in a hurry to buy a product, price protection cover gives you a window of time when you can find it cheaper and make a claim.
- The price protection is complimentary. This means you don't have to pay for the benefit of the insurance policy. This type of price protection cover doesn't typically have an excess you need to pay when you made a claim, either.
- Very specific requirements. The conditions around timeframes, in-store purchases, geographic locations and price differences mean you probably won't use price protection cover very often. So make sure you consider a credit card's other features as well.
- Higher annual fees. Credit cards with complimentary insurance can have higher annual fees than more basic cards, particularly if they are gold, platinum or black cards with other perks.
- Interest rates. As price protection cover is only offered for eligible items you buy with a credit card, there is a risk of interest charges if you don't pay off the total balance by the due date on each statement.
How to compare credit cards with price protection cover
- Look at the annual fee. Credit cards that offer this type of price protection for purchases typically have annual fees ranging from $0 to $700 or more. As there's no guarantee you'll benefit from this feature, make sure you weigh this cost against the cards other features and benefits to decide if its worth it.
- Compare interest rates and interest-free days. You'll typically get more value from purchase insurance covers like a guaranteed pricing scheme when you pay off your card each month (or as you go) to avoid interest. But if you think you'll pay off purchases over a few months, look for a card with a low purchase rate under 15%.
- Check the policy details. Credit card insurance policy booklets include full details of what's covered and how to make a claim. They'll typically list this cover as "guaranteed pricing scheme" or "price protection cover" but it does vary. Make sure you check these details to decide if it's a feature you're likely to be able to use.
- Look at other features and extras. In most cases, you won't make price protection claims very often. So consider other features you'll be able to use more often. For example, if you regularly spend with a credit card rewards could offer points per $1 spent or if you often carry-over a balance a low rate could offer more consistent savings.
Frequently asked questions
How do I make a price protection claim with my credit card?
You'll need to follow the claim process that's outlined in your credit card's insurance policy booklet. But in general, you'll need to apply online or by phone and include such as the receipt for the item you bought and the catalogue or a photo showing it at a cheaper price nearby.
What purchases are covered by a guaranteed pricing scheme?
Guaranteed pricing schemes typically cover physical items you've bought with your credit card in-store in Australia. For example, a TV, laptop, jewellery, shoes or suitcase. Some policies also cover household furniture. But most policies won't cover software, food or secondhand items.
Where can I find the insurance terms and conditions for a credit card?
The bank or brand's website includes links to the complimentary insurance policy. This document typically includes details for all the insurance available. So if a card offers price protection cover and travel insurance, they'll usually be included in the same insurance policy document.
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