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

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 pros and cons 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.

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

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.

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. As noted above, purchase protection is typically secondary, which means that if you have primary insurance to cover the item, you must apply there first.

That said, 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 5 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 or $1,000 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.

Recommended: When Are Credit Card Payments Due?

Pros and Cons of Credit Card Purchase Protection

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

Pros

Here’s a closer look at 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 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.

Recommended: Can You Buy Crypto With a Credit Card?

The Takeaway

Credit card purchase protection can be a valuable perk 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, provided the situation meets the eligibility criteria.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

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 5 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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOCC-Q424-024

Checks may not be as common as they once were, but there’s one kind of check that remains a gold standard in large financial transactions: a cashier’s check.

Also known as an official check, a cashier’s check is backed by bank funds rather than personal funds. This provides assurance to the recipient that the money is available and ready to go. Due to their security, cashier’s checks are often required for high-value transactions or when certainty of payment is critical. For example, you may need a cashier’s check when making a large purchase or putting a down payment on a home.

To get a cashier’s check, you need to provide the full amount of the check, plus any fee, up front to the bank. This allows the bank to stand behind the check. Read on to learn more about this important financial tool.

What Is a Cashier’s Check?

A cashier’s check is a check that is issued by the bank or credit union, rather than the payer. Unlike a personal check, which is drawn from the check writer’s account, a cashier’s check is drawn from the bank’s own funds.

When you get a cashier’s check, the bank moves the money from your bank account into its own and guarantees the payment to the recipient. This makes cashier’s checks one of the most secure payment methods available, as the recipient can be sure that the check will not bounce due to insufficient funds.

A cashier’s check includes details like the bank’s name, the amount, and the recipient’s name, all printed by the bank, which adds an extra layer of security.

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When Do You Need a Cashier’s Check

Cashier’s checks are often used for transactions where immediate availability of funds is required or when the seller wants an extra guarantee that the funds are legitimate. You may need to use a cashier’s check in the following situations:

•  High dollar payments: Due to their security, cashier’s checks are often used when making large transactions such as buying a car, a home, a boat, or fine art. When there is a lot of money at stake, sellers often prefer cashier’s checks because they reduce the risk of bounced checks or fraud.

•  Real estate transactions: Cashier’s checks are commonly requested for down payments or closing costs on homes and other types of property. Even if you’re only entering a rental contract on a home, a landlord or property management company may ask for a cashier’s check to cover the first and last month’s rent.

•  Online marketplace purchases: Cashier’s checks are frequently used for payments between individuals that don’t know each other. For instance, if you are buying a used car from a stranger who listed it online, the seller may request a cashier’s check to make sure they will get paid.

How and Where to Get a Cashier’s Check

Banks and credit unions typically provide cashier’s checks to their customers (and sometimes to non-customers). Here’s how to get a cashier’s check.

•  Visit your bank or credit union: Typically, you need to be a bank account holder to get a cashier’s check at a bank or credit union. However, some institutions offer cashier’s checks to non-account holders if they pay the full check amount in cash up front.

•  Provide the necessary details: To issue a cashier’s check, the bank will request the name of the payee (the recipient of the check) and the exact amount you wish to pay. They may also ask for any information (such as the reason for the check) to print in the memo line. You’ll likely also need to present a government-issued ID, such as a driver’s license or passport.

•  Pay the check amount and (if applicable) fee: The bank will typically withdraw the check’s amount from your checking account, along with any fee they charge for issuing the check (more on that below). If you do not have an account with the issuing bank, you may need to pay in cash or with a debit card.

•  Receive the cashier’s check: Once the bank processes your request, they will print the cashier’s check with the payee’s name and the amount. The teller will then sign the cashier’s check and give it to you.

While you typically need to purchase a cashier’s check in person, some banks (traditional and online) will allow customers to order cashier’s checks through their website or mobile app. In this case, the check is typically mailed directly to the recipient.

How Much Do Cashier’s Checks Cost?

The cost of obtaining a cashier’s check varies by bank or credit union, but fees typically range from $5 to $15. Some institutions may waive this fee for premium account holders or customers who meet certain criteria, such as maintaining a certain minimum balance. Fees may be higher for non-account holders.

Cashier’s Checks and Safety

One of the main reasons people use cashier’s checks is their high level of security. Since the funds are guaranteed by the bank, there is little risk that the check will be returned for insufficient funds. These checks also have some extra features, like watermarks and at least one bank employee signature, that make them harder to counterfeit. In addition, you don’t have to worry about sharing your personal checking account information with the recipient, since the check isn’t drawn from your account.

Despite their safety and reliability, however, cashier’s checks are not immune to fraud. They are sometimes forged and used by criminals to solicit payments from unsuspecting victims. One popular scam (called the “job scam”), for example, is when a person is offered a job and then receives a fake cashier’s check for a too-high amount as prepayment. They are then asked to return the excess payment as a gift card. Later, they learn that the cashier’s check was counterfeit.

These tips can help you avoid cashier’s check scams:

•  Beware of any unexpected windfalls being paid out by a cashier’s check.

•  If you sell items online and get paid by cashier’s check, it’s wise to wait for the check to fully clear before providing any goods.

•  Be cautious of overpayment scams where a cashier’s check is used to pay for something, and you are asked to send the excess funds back.

•  Verify the issuing bank by contacting them directly and ensuring the check is legitimate.

Recommended: How to Verify a Check Before Depositing

How Cashier’s Checks Compare to Certified Checks and Money Orders

Cashier’s checks look similar to other types of secure payments, such as certified checks and money orders. While there are some similarities between all three payment types, there are also distinct differences. Here’s a look at how they compare and why you’d choose one over the other.

Cashier’s Checks vs Certified Checks

A certified check is a personal check that the payer’s bank has confirmed is backed by sufficient funds and bears an authentic signature. Unlike a cashier’s check however, a certified check is drawn from the payer’s funds, not the banks.

Typically, the bank will set aside the funds needed for the check and won’t allow them to be withdrawn for any other reason. This makes a certified check more secure than a personal check. A special stamp and a signature from a bank representative shows that the check has been certified by the bank.

While certified checks offer a higher level of security than personal checks, they do not provide the same guarantee as cashier’s checks because the bank isn’t responsible for covering the funds directly. Cashier’s checks are generally considered more secure and often preferred over certified checks for larger transactions.

Cashier’s Checks vs Money Orders

Like a cashier’s check, money orders are guaranteed funds. You purchase a money order with cash or a cash equivalent (such as a debit card), assuring that it cannot bounce. Unlike cashier’s checks, however, money orders can be purchased at many different locations. This includes banks as well as post offices, grocery stores, drug stores, convenience stores, and check-cashing stores. Also, fees tend to be lower, often between $1 and $5.

Another difference is that money orders have limitations — they are often capped at no more than $1,000, making them less suitable for large transactions like buying a car or making a down payment on a house. Money orders are often used for smaller transactions or for people who don’t have access to traditional banking services.

The Takeaway

While checks have largely been replaced by digital payments, cashier’s checks are still the payment of choice in many large transactions. These checks are backed by, and paid out by, the bank; you supply the bank with the funds in advance. Just keep in mind that some online banks (including SoFi) do not offer cashier’s checks.

Understanding how cashier’s checks work, and how they compare to certified checks and money orders, can help you choose the right payment method for your needs.

FAQ

How can I avoid cashier’s check fraud?

To help reduce the risk that you’ll be a victim of cashier’s check fraud:

•  Only accept cashier’s checks from trusted sources or individuals.

•  Contact the issuing bank directly to verify that the check is legitimate.

•  Avoid transactions with overpayment or refund requests, as these are common scams.

•  If you’re selling something to a stranger, wait for the cashier’s check to fully clear before providing goods or services, as it can take several days for a bank to verify funds.

What happens if a cashier’s check is lost or stolen?

If a cashier’s check is lost or stolen, contact the issuing bank immediately to report the issue. You will need to provide details like the check amount and payee. The bank will likely require you to file a declaration of loss and may impose a waiting period (often 90 days) before reissuing the check. During this time, the bank verifies that the original check has not been cashed. Some banks charge a fee for reissuing a lost or stolen cashier’s check.

Does a cashier’s check have your name on it?

Yes, a cashier’s check typically has your name on it as the purchaser. It will also include the bank’s name, the payee’s name (the person or entity you’re paying), and the exact amount of the check. Your name is included to ensure the recipient knows who issued the payment and allows for easier record-keeping on both sides of the transaction.

Does a cashier’s check come directly out of your account?

When you request a cashier’s check, the bank withdraws the full amount from your account before issuing the check. Once the funds are withdrawn, the check is backed by the bank’s own funds, providing a guarantee to the recipient.

If you do not have an account with the issuing bank, you may need to provide cash or pay with a debit card.

What info is needed for a cashier’s check?

To obtain a cashier’s check, you need to provide the following information:

•  Payee’s name: The person or entity to whom the check will be made payable.

•  Exact amount: The dollar amount you want to transfer.

•  Your identification: A government-issued ID to verify your identity.
In addition, you’ll need to make sure sufficient funds are available in your account (or provide cash) to cover the check amount and any fee.

Photo credit: iStock/TARIK KIZILKAYA

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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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.