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Among the sea of valuable credit card perks, purchase protection is one that often gets overlooked. If you have a credit card with purchase protection, you can replace an item you paid for with your card should it get damaged, lost, or stolen.

However, there are restrictions on what is and isn’t covered under credit card purchase protection, which is why it’s important to understand how it works. You’ll also want to know the drawbacks and advantages of credit card purchase protection to determine if it’s the right path for you.

What Is Credit Card Purchase Protection?

Also known as purchase insurance or damage protection, credit card purchase protection is a type of credit card protection. If you have a purchase protection credit card, the credit card issuer might help you replace a stolen, lost, or damaged item that you bought using the card.

Purchase protection doesn’t last forever though — there are generally limits on the duration of the protection period and the coverage amounts. Also note that purchase protection serves as secondary coverage. This means that you must first file a claim with your primary insurance, and then purchase protection may kick in to cover any remaining amount.

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How Does Credit Card Purchase Protection Work?

As mentioned, purchase protection only applies to items that you paid for with your credit card. Not all instances of theft or damage are covered.

The protection period offered by cards with purchase protection can last anywhere from 90 to 120 days after the purchase is made. Coverage limits and terms also can vary. For instance, a credit card might have $500 cap per claim, with a maximum benefit of $50,000 per account.

Some card issuers extend this credit card advantage to recipients of gifts that you purchased using the card. For instance, if you bought a computer for your son for his birthday, he may be able to file a claim to get it replaced if it’s covered by purchase protection. However, the recipient would generally need to have an eligible credit card with that same card network.

Understanding How to Use Credit Card Purchase Protection

If, for example, the screen on the cell phone you purchased with your credit card shatters, and the incident occurs within your credit card’s purchase protection time frame, you may be able to take advantage of purchase protection.

To get coverage, you’d need to file a claim with the credit card. The claim form is usually found on a credit card’s website or listed under “forms” after you log in to your account. If your claim is approved, it typically takes anywhere from 15 to 30 days for you to receive reimbursement for your claim.

What Does a Credit Card’s Purchase Protection Not Cover?

Here’s what credit card purchase protection typically doesn’t cover:

•   Items that are excluded under the policy. Each card issuer has varying items that are excluded from coverage. For example, credit card purchase protection may exclude motorized vehicles, perishable items, antique or collectible items, computer software, and items purchased commercially for resale. There are also usually exclusions on the reasons for why you lost or damaged an item — for instance, items that were lost or damaged due to acts of war or fraudulent or illegal activity aren’t usually covered.

•   Items that mysteriously disappeared. If an object ends up missing with no apparent cause and without evidence of a wrongful act, then that item generally will not be covered by purchase protection.

•   Items damaged, lost, or stolen after the protection period. If an item you bought with your credit card was lost, damaged, or stolen after the coverage time window ended — usually past 90 to 120 days — then it won’t be covered.

•   Items that are used or pre-owned. Many credit card issuers exclude used or pre-owned items from purchase protection coverage.

What Does a Credit Card’s Purchase Protection Cover?

As discussed, the terms, items included, and coverage amounts provided vary by credit card issuer. For the most part, a credit card’s purchase protection covers items that were unintentionally lost, stolen, or damaged within a specified protection period.

You’ll also want to mind the cap per claim and per account. Your coverage limits may apply by account or by year. For example, you might have a cap of $500 per claim, and be limited to making $50,000 in claims per account you own.

Read your credit card’s terms and conditions to see what exactly is included under purchase protection and what coverage limits apply. This can also provide other valuable information to credit card holders, such as how credit card payments work.

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Pros and Cons of Credit Card Purchase Protection

Here’s an overview of the advantages and disadvantages of credit card purchase protection:

Pros

Let’s dive deeper into the upsides of credit card purchase insurance:

•   Built-in protection with your card. Probably the most significant advantage of credit card purchase protection is that it is essentially free insurance that comes with your card. As long as an item is covered under your card’s purchase policy, and you file a claim without the protection period, you typically can get some help replacing a lost, damaged, or stolen item, rather than driving up your credit card balance covering the cost.

•   No deductible. Unlike primary insurance, you might not need to pay a deductible to get your eligible claim reimbursed.

Cons

Here are the downsides of purchase protection to be aware of:

•   Limits. As insurance usually goes, there are coverage caps per claim and per account or year. You’ll need to check with your credit card issuer to determine the limits for your purchase protection policy.

•   May take longer than primary insurance. The time to file a claim and get reimbursed could take longer compared to the turnaround for primary insurance. That’s because purchase protection is secondary coverage, meaning you’ll usually have to go through your primary insurance first, whether that’s homeowners, auto, or rental insurance.

Recommended: What is the Average Credit Card Limit?

Filing a Credit Card Purchase Protection Claim

Here are the steps you’ll need to take to file a claim for purchase protection:

1.    Review your card’s policies to see if the item is covered. Before moving forward with filing a credit card purchase protection claim, it’s smart to take a moment to make sure the item qualifies. Also remember that you’ll need to make at least your credit card minimum payment, even while waiting for a response.

2.    Fill out a claim form. This is usually found on the credit card issuer’s website or through your account after you log in. It’s recommended to file a claim as soon as you can. Keep in mind that credit cards typically have a time frame in which you can file a claim after the incident, usually within 30 to 90 days.

3.    Provide requested documents. When you file your claim, you’ll generally need to provide the following documents:

◦   A copy of the credit card statement that includes proof of purchase

◦   An itemized original receipt showing the purchase

◦   A copy of your insurance claim and insurance declaration page (if you have primary insurance)

◦   A police report (if the item was stolen)

Recommended: Tips for Using a Credit Card Responsibly

Other Types of Credit Card Protection

Beyond purchase protection, there are other types of protection commonly offered through credit cards. These include:

•   Return protection: This perk that some issuers offer allows you to return an item, even when the retailer has a no-return policy. While some cards do offer return protection, other cards have phased it out in recent years.

•   Price protection: Should you buy something and the item then drops in price within a specific period, price protection will kick in and match the lower, advertised price. Depending on the card, the time frame during which this applies might range from 30 to 60 days. You might get refunded up to a certain amount for specific types of purchases, though price protection usually has limits per item and per year.

•   Extended warranty protection: Instead of hopping on a retailer’s pricey service plan or opting for extended warranty at the checkout register, you might be able to take advantage of a credit card’s extended warranty protection. This protection matches the terms of your manufacturer’s warranty. However, it usually extends protection for up to a year, and some cards will even double the manufacturer warranty.

Beyond these protections, credit cards can offer an array of other perks, such as credit card travel insurance and credit card rental insurance, among others.

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The Takeaway

Credit card purchase protection is a valuable perk to take advantage of if a card offers it. The built-in insurance offered by purchase protection can save you should an item you bought with your card get lost, stolen, or damaged.

If you’re looking for a new credit card that offers a myriad of perks, consider the SoFi Credit Card. SoFi’s credit card offers cell phone protection and Mastercard ID theft protection. Plus, you can lower your APR through on-time payments and earn generous cash-back rewards on eligible purchases.

FAQ

Do all credit cards offer purchase protection?

Not all credit cards offer purchase protection. In fact, cards offering this perk have become less common in recent years.

How do you get your money back from a credit card purchase?

You’ll need to file a claim and provide requested documents, such as a receipt, a copy of your credit card statement, and in some instances, a police report or proof of primary insurance. Once your claim has been approved, you can expect reimbursement within 15 to 30 days.

Is there a time limit on credit card purchase protection?

Yes, there’s a time window after you’ve made the purchase during which purchase protection applies. This is usually 90 to 120 days. There’s also a time limit as to when you can file a claim after the incident, which can be anywhere from 30 to 90 days. It’s best to file a claim as soon as possible.

Photo credit: iStock/filadendron

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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How old an authorized user has to be really depends on the credit card issuer. Some set the minimum age for an authorized user on a credit card at 13, while others require that an authorized user is 15 or even 16. Many issuers don’t specify a minimum age requirement at all.

In other words, it’s largely up to the adult’s discretion whether a minor seems old enough to become an authorized user. While it can serve as an educational tool and help build their credit, it also can lead to racking up debt and impacting both parties’ credit. You’ll want to make sure you know what you’re getting into in order to determine if it’s the right arrangement for you.

How Old Does an Authorized User Have to Be?

While the minimum age to get a credit card of your own is 18, an authorized user on a credit card can be as young as 13.

That being said, the minimum age for an authorized user on a credit card ultimately depends on the credit card company, as each issuer has its own age requirements. Some set the minimum age to 13 years old, while others may make authorized users wait to get a credit card at 16 or 15. Some credit card issuers don’t specify a minimum age for authorized users on credit cards.

Factors to Consider Before Adding a Minor as an Authorized User

Before you add a minor as a credit card authorized user, consider the following factors.

Whether You’ll Have to Pay a Fee

Depending on the card, you might have to pay an additional annual fee to add an authorized user. The fee might apply per authorized user, or it may cover, say, three users added to your account.

Check with your card card issuer to see if you might get hit with a fee for adding authorized users to your account.

If They’re Old Enough to Handle the Responsibility

Even if you can add an authorized user as young as 13 to your card, doing so might not be in your best interest — or theirs. For instance, a child in their early teens might not have a basic grasp of managing finances, or they might not be mature enough to handle the financial responsibility and abide by basic credit card rules.

If you’re adding your minor as an authorized user to help them establish credit, a few years is enough time for them to be on their way. Plus, should you slip on your credit, it could also impact your child’s credit.

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How You’ll Track the User’s Purchases

Most credit cards don’t issue unique card numbers to each authorized user. That means if you have multiple authorized users on an account, you won’t be able to easily figure out who made which purchases. Before you go ahead with adding an authorized user, make sure you have a system worked out so you’re not stuck covering their spending.

Whether You’ll Give Access to the Card

While you can give an authorized user their own card, you don’t have to, especially if you’re worried about how they’ll spend with it. If you’re strictly adding a child to your card to help them build credit, there’s no need to hand them a card. They don’t need to have access to your credit card number, either.

Steps to Add a Minor as an Authorized User

First and foremost, you’ll want to carefully weigh the pros and cons of adding someone under the age of 18 as an authorized user. If you have decided that you want to proceed, you’ll need to do the following.

1. Educate the Child About Credit Card Basics

Before adding a minor as an authorized user and giving them the privilege to spend on your card, sit them down and walk them through how credit cards work. For instance, you’ll want to explain what a credit limit is, how interest rates work, what one’s financial responsibility is when putting purchases on a card, and why it’s beneficial to build credit.

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2. Reach Out to the Credit Card Company

Next, you’ll need to contact the credit card company to let them know you’d like to add an authorized user to your card. You can do so by calling the number on the back of the card, or by logging onto your account online.

You usually need to provide the following information about the individual you’re adding as an authorized user:

•   Name

•   Date of birth

•   Social Security number

•   Address (for them to receive the card)

•   Additionally, you may be able to set spending limits or restrictions for the authorized user at this point in the process.

3. Check Your Account

To make sure the authorized user was correctly added, log on to your account on the issuer’s website or through the app. Double-check to make sure the minor’s name and details are all correct. You might also receive an email notification informing you of this change.

The Cost of Adding an Authorized User

Many credit card issuers do not charge a fee to add an authorized user to an account. However, premium credit cards or cards that already charge annual fees, may charge an annual fee for adding authorized users. This fee may apply per authorized user, or you may pay a flat cost for up to a certain number of users.

Beyond this potential fee, there are other costs you could incur by adding an authorized user. For instance, additional purchases made by the authorized user could cause you to rack up a balance. Plus, their activity can impact your credit utilization, which could hurt your credit score.

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Pros and Cons of Adding a Minor as an Authorized User

Here’s an overview of the advantages and downsides of adding a minor as an authorized user to your credit card:

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Pros

Adding an authorized user can have the following benefits:

•   Helps to build credit: A major upside of adding a minor as an authorized user is that it will help them establish credit at a young age. They’ll have a more firm financial footing as a result.

•   Allows you to earn more rewards: Another person making purchases on your card means there’s greater potential to earn more rewards. You can more quickly than if you would if you were the sole user.

•   Serves as an educational tool: If you take the time to teach them, adding a minor as an authorized user to your card can help your child learn credit basics and how to manage credit card debt.

Recommended: Can You Buy Crypto With a Credit Card?

Cons

Beware of the potential downsides of having an authorized as well:

•   May cause you to rack up debt: It can be easy to rack up debt and overspend on the credit card with an authorized user. This is especially possible if you’re giving a child access to your card who is still wrapping their head around financial basics.

•   Can’t easily track who is making the purchases: Because purchases aren’t tracked by the authorized user, it might be tough to figure out which person was responsible for which transaction with your card. This is particularly tricky when you have, say, a joint account user and several authorized users.

•   Can impact credit of both primary cardholder and authorized user: If having several users on your card equates to carrying a higher balance, that can up your credit utilization ratio. As credit usage makes up 30% of your credit score, you’ll want to keep that ratio under 30%. Beyond potentially hurting your credit, also know that any irresponsible credit behavior on your card can hurt your authorized user’s credit. For instance, if you are late on a credit card payment, both your credit and the credit of the minor you added to your card can suffer.

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Tips for Managing a Minor as an Authorized User

If those possible downsides are making you nervous, here are a few things you can do to ensure your minor uses their privileges responsibly:

•   Set limits. Talk to your child and give them an amount they can spend on the card each billing cycle. Also, determine if they’ll be responsible for helping you pay off their share. Or perhaps you might consider an alternative arrangement, such as doing chores around the house to cover purchases they made on their credit card. Hash this out beforehand.

•   Treat the card as a teaching tool. Sit down with your child and go over basics of a credit card, such as how interest fees work, how to read a billing statement, and what can happen if you’re late or miss a payment. You’ll also want to teach them how repayment works.

•   Set alerts. To keep an eye on your child’s spending, consider setting alerts on your credit card. You can set it up so you get notifications for transactions over a certain amount, or any transactions made online, in person, or over the phone.

Recommended: Tips for Using a Credit Card Responsibly

Removing a Minor as an Authorized User

Removing a minor as an authorized user from a credit card is a relatively simple and painless process. To do so, you call the number on the back of the card and let them know the name of the person you’d like taken off. If you have several authorized users on a card, be sure to specify which card user you’re removing.

It’s not a bad idea to leave a paper trail and send a letter to the credit card company reiterating that you’ve requested the change over the phone.

The Takeaway

The minimum age for an authorized user on a credit card varies depending on the credit card issuer. Some require an authorized user to be 13, while others set the age limit at 15 or 16, or even have no formal limit at all.

While you can add a minor as an authorized user on a credit card, you’ll want to carefully weigh the pros and cons before doing so. If you decide to add a child as a user, set some ground rules and teach them credit and financial basics beforehand.

Looking for your next credit card? If you get the SoFi Credit Card, you can earn generous cash-back rewards on all purchases.

FAQ

Do some issuers allow authorized users with no minimum age?

Usually the minimum age requirement to add an authorized user to a credit card is at least 13. However, there are several credit card issuers that don’t note a specific minimum age.

How many authorized users can I add to my account?

It depends on the credit card issuer. Some allow up to four, while others allow up to seven. Some credit card issuers have no limit as to how many authorized users you can add to a credit card. The number of authorized users might also depend on what type of card it is, such as a rewards or travel credit card.

Is an authorized user relationship or a joint account holder better?

It depends on what kind of privileges you want the additional card user to have and the reason you’d like to add them. If you want to help boost someone’s credit and not have them responsible for making payments, then an authorized user could be the better route. If you’d like the user to be equally responsible for making payments and have access to make changes on the account, a joint account holder might make sense.

Photo credit: iStock/Manuel Tauber-Romieri

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .


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Whether you’re new to saving for retirement or an old pro, you can use your credit card for funding your IRA or other retirement accounts.

How exactly does this work?

5 Steps for Using a Credit Card To Save for Retirement

Step 1: Learning About IRAs & Other Retirement Funds

If you don’t already have a retirement account, it’s a good idea to familiarize yourself with the different types that are available. You may want to consider opening an IRA, stocks, or a mutual fund — a package of stocks and bonds that includes many different companies — to help offset risk.

💡 Recommended: Understanding the Different Types of Retirement Plans

Step 2: Finding the Right Credit Card

Once you’ve figured out how and where you want to invest, you can begin your search to find the right credit card; specifically, a cash-back credit card. These cards offer a percentage back (most offer about 2%) for every dollar you spend. But instead of putting that money directly into your regular bank account or using “points” (which usually don’t have as much value) to shop or get discounts, you can flip that money into your shiny new retirement fund, where it will earn compound interest.

💡 Recommended: How to Choose a Credit Card That Fits You

Step 3: Putting Your Cash-back Rewards To Work

As with any credit card, it’s important to keep your spending in check so that you can pay it off every month. After all, paying interest pretty much negates the whole cash-back thing. But it can be a good idea to put big purchases on your card (as long as you can pay it off that month).

So if you need a new computer for work, you can buy it with your credit card. Bonus: Your card may offer insurance on such a purchase. So it’s a good idea to read the fine print and find out.

Same goes for paying rent with your credit card, as long as your landlord doesn’t charge a fee for credit card payments. Your monthly bills too. The average American pays about $8,600 a year in bills (not including rent or mortgage). If you have to pay for these services anyway, why not earn a few hundred dollars a year by paying them with your credit card?

Again, in order to really benefit from these cash-back rewards, it’s important to pay off your credit card bill every month. Paying interest will just eat into your rewards.

💡 Recommended: Guide to Cash-Back Rewards

Step 4: Mixing & Matching Your Cash-back Cards

Some cards give you a flat cash-back rate. Others offer tiered rewards for specific purchases like groceries, gas, or dining out. If you want to get the most cash-back rewards possible, it’s a smart idea to look at your spending. Figure out what areas you spend the most on each month, and choose a card (or multiple cards) that offer the best rewards for those categories.

Step 5: Automating Your Payments & Investments

To make sure you don’t give in to temptation, you may want to consider automating the cash-back payments to your retirement fund. While you’re at it, you can automate your monthly bill payments so you don’t have to lift a finger to earn those cash-back rewards. You can do the same with your monthly credit card payment to ensure you always pay it on time.

💡 Recommended: Guide to Investing With Credit Card Rewards

The Takeaway

The keys to saving successfully for retirement are to start early, pay off debt quickly, and be consistent with investments. That’s especially true if you want to retire early. And while credit cards can be dangerous when used carelessly, they can obviously offer a great advantage for people who can pay off their credit card bills every month.

If you want to get started on saving for your retirement with a credit card, you can check out SoFi’s very own credit card, which offers 2% cash-back rewards points. Pair it with a SoFi IRA, and you’re in business.

FAQ

How do credit cards help save money?

Credit card companies are essentially providing you with free loans, but only if these two things are true: First, you pay off your bills in full every month to avoid accruing interest. And second, you’re paying no annual fee. In that case, you can say that credit cards are saving you money.

Can I fund my IRA with a credit card?

Yes, you can actually fund your IRA with a credit card. The way it works: Investment companies like Schwab, Fidelity, and Morgan Stanley partner with credit cards offering cash back. The cash back you earn on those cards can be directly deposited into your IRA with that company. You’d have to spend $300,000 to earn $6,000 in cash back — the 2022 IRA limit for people under 50 — but it’s possible.

How do I contribute to an IRA?

The first step is to open an IRA account, either through your employer, a bank, traditional investment company, or online financial institution. Then make one or more deposits up to the annual limit. Deposits can come directly from your paycheck, an online transfer, or even a cash-back credit card.

Photo credit: iStock/RgStudio

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points toward active SoFi accounts, including but not limited to, your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, Student Loan Refinance, or toward SoFi Travel purchases, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

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