Once-Rare Cell Phone Protection Now a Common Credit Card Perk

If you're like many Americans, your cell phone has essentially become another appendage. And if you've ever broken — or shattered — that appendage, you know full well the panic that can set in.

That might be why you decided to pay extra for insurance from your wireless carrier, typically at a cost upward of $20 each month, on top of your bill. But what if you could get similar peace of mind for free? If you have an eligible credit card, you can.

Cell phone protection used to be a rare side perk found on only a select few credit cards. But in recent years, it's begun to show up as a standard benefit for many customers.

Here's why, and how it can help — as well as some scenarios where you may want to think twice before using the perk.

» MORE: Should you pay your cell phone bill with a credit card?

Phones > showering?

It’s hard to find an American who doesn’t own a cell phone these days. According to the Pew Research Center, a staggering 97% of Americans have a mobile phone, with 85% owning a smartphone — up from just 35% of Americans carrying a smartphone in 2011.

And our phones aren’t just something we carry around cavalierly. We've become positively attached to and dependent on them. One in 3 millennials would rather give up showering for a month than spend a day without their cell phone, per an American Express Trendex survey in early 2021.

Yet while many have experienced cell phone damage, like water logging or cracked screens, Americans are waiting longer to replace their phones. According to Daniel Research Group, which offers market research services, Americans wait an average of 3.17 years to get a new one, 25% longer than they waited in 2015.

Part of that reluctance may be the cost involved, especially if a phone is uninsured. A new iPhone 12 might set you back $800 out of the box. So if your current phone has a few screen cracks? You can maybe live with those until your next scheduled device upgrade.

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A credit card trend that's a 'win-win'

Up until a few years ago, cell phone insurance was not a common perk for cardholders. You could find it on several Wells Fargo credit cards and a smattering of individual products from other issuers, and that was about it.

But in 2019, Mastercard unveiled cell phone protection as an added benefit for World and World Elite cardholders. Mastercard does not issue credit cards; it's a payment network that services many, many credit cards, regardless of what bank issues them. As such, this change had far-reaching effects, from old-guard cards to fresh products rolled out by new startups.

American Express — which is both a card issuer and a payment network — followed suit in early 2021, announcing the addition of cell phone insurance to many of its premium credit cards. Terms apply.

Experts say it's a trend that makes sense. “Promoting these benefits to cardholders can encourage spend on the card, and provide a win-win for the issuer and the customer," says Megan Cipperly, senior director of insights at Competiscan, a firm that analyzes how companies communicate with customers. "The customer gets access to free cell protection by using their card to pay their monthly cell phone bill, and the issuer ensures their card is used monthly.”

Even several retail credit cards are starting to offer the perk, which Cipperly says can help encourage customers to use those cards outside those store brands. It might also serve as a differentiator among travel credit cards, too.

“Many of the ancillary benefits associated with credit cards are tied to travel," Cipperly says. "Cell phone protection provides a way for the issuer to diversify their benefits, especially since during COVID-19, travel benefits may not have felt as attractive to customers as they once did.”

» MORE: Top credit cards that offer cell phone insurance

What you need to know about credit card cell phone protection

All credit cards and benefits are not created equal. Often, details of the cell phone protection perk can be buried deep in the terms and benefits pages of your credit card.

“This can be a great cost savings for consumers if it is offered by their credit card and if they understand the terms," says Linda Sherry, director of national priorities at Consumer Action, a national nonprofit advocacy and education organization. "Make sure you understand what exactly is covered and the requirements for coverage, like loss, theft and damage.”

Here's what you should know:

• You’ll need to pay your cell phone bill with the credit card: In most cases, just holding a credit card that offers cell phone protection isn’t enough.

• Paying via a credit card may make you ineligible for a discount: Many major carriers offer a monthly discount, sometimes per phone line, if you set up autopay with a debit card or bank account — but credit card payments won't qualify for the discount. If you have multiple phone lines on your plan, you might save more with that discount than you would with the insurance coverage.

• You’ll owe a deductible: That amount varies by card, usually ranging between $25 and $50 per claim. Plus, each card has limits of how much it'll cover for each claim, and how many claims are allowed.

• You'll have to file paperwork: Terms may vary, but be prepared to submit documents like a claims form, a billing statement from your wireless provider, a copy of a receipt for any repairs, etc.

• Coverage may not be primary: In some cases, cell phone protection from your credit card is supplemental to other insurances, like home insurance, car insurance or cell phone insurance you might have purchased separately. That means it doesn’t kick in unless all other insurance options have been exhausted.

• Typically, a "lost" phone doesn't qualify for coverage: Theft or damage? You're generally covered. But if you just misplaced it? Probably not.

• The definition of "damage" varies: While most smartphone holders have had the misfortune of dealing with a dreaded cracked screen, screen repair is not universally covered with this perk.

• Even cards that appear similar may not share the same benefits: Chase has a popular family of Ink Business credit cards, but only one of these similarly branded cards comes with cell phone protection. “I was paying my cell phone bill with my Ink Business Cash® Credit Card to earn 5x rewards on the bill, not realizing that it’s actually only the Ink Business Preferred® Credit Card that comes with cell phone protection,” says Angie Sparks of Tampa, Florida.

• The perk may come from different places: Payment networks, like Visa and Mastercard, can make coverage available on certain card types, but the card issuer (the bank) can decide which cards it applies coverage to.