Do your research and watch your spend!
‘Complimentary’ travel insurance is an increasingly used feature on many premium credit cards.
According to ASIC’s Money Smart, 20% of travel insurance is used through a credit card compared to 19% through a travel agent and 31% direct from an insurer.
Traveller beware Credit cards with complimentary travel insurance can be a great way to save money, but it is important to check the eligibility criteria and what the policy will cover.
Travel insurance that comes with credit cards may not in some cases cover as much as a stand alone travel insurance policy you buy separately.
There’s the old saying that nothing comes for free…
Complimentary travel insurance isn’t really ‘free’. The travel insurance premium is usually paid through the annual fee on the card. So you might as well take advantage of something you have already paid for – right?
Do your homework first!
As with all types of insurance, it is advisable to do your homework, compare policies and always read the terms and conditions.
Generally, travel insurance covers you for medical expenses, loss of luggage or personal items, disruptions to travel and theft. Always check the limits and exclusions before you buy.
A travel insurance policy included on a credit card offers varying levels of cover when travelling domestically and internationally.
In many cases, for the credit card travel insurance to kick in, you need to satisfy certain terms and conditions. For example, you may need to pay for your departure ticket on your card to activate cover, while other cards require you to exceed a minimum spend threshold of trip expenses on your card before that particular journey will be covered.
Activation requirements, where consumers are required to use their credit card to pay for travel arrangements, vary from provider to provider.
Do your own research with travel agencies, direct with insurers or through online insurance comparison sites to help you make the right decision between stand alone and credit card travel insurance. These online sites provide further details about pros and cons of ‘free’ credit card travel insurance.
They will help answer questions like:
• How do credit card travel insurance and stand alone travel insurance compare?
• Who is covered?
• What is covered?
• What are the price comparisons?
• What excess will you pay if you make a claim?
• How much of your luggage and valuables are covered?
• What is the maximum period you can travel?
• What is the limit of your medical expenses?
Take control of your travel spending
The activation requirements (eg paying for that plane ticket), minimum spend requirements and on-the-go holiday spending and shopping could lead you to a hefty credit card bill at the end of your travels. Budget well upfront!
You don’t want to be one of the one in six Australians drowning in credit card debt or going over your credit card limit as a result of your holiday spending.
If you need to fund your holiday, talk to us first before you overload your credit card. There are other options to pay for those big ticket items!