Did you pick up a new phone during a sale on Black Friday or Cyber Monday and are wondering what’s the best way to protect that $1000+ purchase? You’re in luck because one of the newest benefits credit cards are adding is cell phone insurance. To be eligible, all you have to do is charge your cell phone bill to a card that provides coverage.
It doesn’t matter how you paid for the phone, although I hope you used a card that has some sort of purchase protection included.
Using the coverage from your credit card would seem to be a no-brainer. The coverage is free and continues for as long as you’re paying your bill with the card. However, did you look into if this is the best way to cover your phone against damage?
We just picked up a new iPhone 11 Pro.
The list price of this phone:
So if it gets damaged from dropping it, gets smashed or if it otherwise becomes non-functional, that’s how much I’ll have to pay to replace it.
Here are the maximum payments from some of the credit card cell phone coverage:
- IHG Rewards World Mastercard – $600
- Chase Ink Business Preferred – $600
- Wells Fargo credit cards – $600
- UBER Visa – $600
- US Bank Visa Platinum – $600
- IHG Rewards World Elite Mastercard – $800
- JetBlue Plus – $800
- Barclaycard Arrival+ – $800
- Citi Prestige – $1,000
All of the cards have a $50 deductible on claims, except the Ink Business Preferred, which charges a $100 deductible.
I’m currently using the Ink Business Preferred to pay our cell phone bill each month. I like that it has coverage and it also pays back 3 Ultimate Rewards per dollar for communication expenses. I’m earning 4,500 Ultimate Rewards yearly from our cell phone charges. Setting a base redemption at 1.5 cents per point, that’s $67.50 of value.
But what if something happens to the new phone and it’s beyond repair? The card will only pay up to $600. I’ll be on the hook for an additional $550.
So maybe it would be a good idea just to use the best card for earning points on my cell phone bill and pay for insurance myself.
For a plan that covers repair and damage, the cost is $9.99 monthly or $199 for two years. There’s a $29 deductible for screen replacement and $99 deductible for other damages. With AppleCare+, you know that everything will be handled in the Apple ecosystem with repairs and replacements done at your local Apple store or any of their locations worldwide.
The major third party insurance player is SquareTrade. Their cell phone protection coverage rates are lower than AppleCare+.
Their plans are month-to-month with no option to prepay for a longer period of time.
A $149 deductible applies to all SquareTrade smartphone claims. This is true regardless of device type, model/make, age, whether the phone was purchased or leased, or whether the claim involves accidental damage, electrical/mechanical failure, or any other failure or damage type.
A $25 deductible may apply when a certified tech replaces your broken screen at the time and place of your choice (available for limited devices and geographies).
What to do?
My current plan is using the included coverage with the Chase Ink Business Preferred. The card does have a $95 annual fee, and I don’t currently use it for any other charges. Including the annual fee and the $550 I’d have to pay to replace the phone after the $600 benefit from the card, that’s a $645 out-of-pocket expense. I’m offsetting that expense by earning $67.50 in points.
I could move the cell phone bill to the Citi Prestige. The coverage is included and pays up to $1,000 per claim. I’d have about $100 extra to pay for a replacement phone. The card does come with a $495 annual fee, but when you subtract the $250 travel credit, the card effectively costs $245. Not giving any other value to the card, using the Prestige to cover my cell phone could cost up to $345 if I needed to replace the phone. I’d also earn 1,500 ThankYou points worth about $20.
AppleCare+ is the best coverage. For $199, it will pay for the full replacement cost of the phone, minus a $99 deductible. The cost of the plan and the most I’d have to pay out of pocket is $300. I could then move my cell phone bill to the Ink Cash card, where I’d earn 5x points. That’s worth at least $112.50 in Ultimate Rewards.
Of course, all of these scenarios are assuming that something terrible is going to happen to the iPhone and we’ll need to pay for a full replacement. If we only have to repair the phone and the cost falls within the $600 range, using the free coverage supplied from a credit card makes more sense.
When phones only cost $600 – $800, you didn’t have to worry about these things. The coverages supplied by credit cards would more than cover the cost to replace a phone. Now that it can cost up to $1,449 for the top of the line iPhone 11 Pro Max, only having $600 of coverage isn’t even half the price of the phone.
Take that into consideration when you think if you want to buy coverage for your phone or if you’re OK with paying the difference between what your credit card’s coverage will reimburse you and the cost of a new phone if necessary.
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This post first appeared on Your Mileage May Vary