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Discover is ending five card benefits for shoppers and travelers that aren't used much, the company says - but the changes won't happen until long after the holidays.
The card network and fifth-largest card issuer (by balances) said it is cutting the following benefits: purchase protection, return guarantee, extended product warranty, auto rental insurance and flight accident coverage.
Discover cuts benefits
- Purchase protection - no claims can be made after July 13, 2018. Insures damaged or stolen purchases up to $500 for 90 days after purchase.
- Return guarantee - no claims after May 29, 2018. Helps get money back on unsatisfactory items within 90 days, up to $500 per item and $2,500 a year.
- Extended product warranty - ends for purchases made after Feb. 28, 2018. Covers additional year after original warranty expires, for eligible items with warranties 36 months or less.
- Auto rental insurance - no claims after May 29, 2018. Secondary insurance for loss or damage up to $25,000.
- Flight accident - no coverage for flight purchases made after Feb. 28, 2018. Travel accident coverage up to $500,000 when buying airline tickets.
Not on the going-away list is price protection , which refunds the difference in price if you spot an identical, lower-priced item within 90 days of purchase. Discover's price protection is good for up to $500 per item with a ceiling of $2,500 per year.
Discover is not the only card issuer that has cut back benefits for shoppers and travelers in recent years. Visa and Mastercard, for example, began slashing return assistance and guarantee perks in 2014.
Trimming costs without affecting customers
The benefits are being ended "due to prolonged low usage," Discover said in a statement. The changes will affect all cardholders, spokesman Derek Cuculich said by email.
The card company appears to be trimming costs without rocking its customers' boats too much, analysts said.
"They've done well in customer satisfaction - you have to assume they've done some market research," said Brian Riley, director of credit advisory service at Mercator Advisory Group. He said it is significant that Discover's rewards program, which is relatively generous, is unaffected by the changes. Discover is No. 2 in customer satisfaction in JD Power's 2017 survey .
Time for a card reboot?
However, the cuts may mean it is time for some cardholders to reevaluate their card lineup if the lost benefits are useful to them, said Riley. "Year-end is a good time to look at cards," he said. "If you want those features, maybe look at other products - not necessarily ones that have a $450 annual fee."
For example, Visa's traditional benefits include auto rental damage coverage , while its Signature cards benefits include extended warranties for items that have warranties lasting up to three years. Mastercard standard benefits include accident insurance for travelers of up to $75,000 per person when tickets are bought with the card. Mastercard and Visa already dropped return protection , but American Express still lists it as a perk for eligible cards.
Other companies to scale back on card benefits?
"It'll be interesting to see how (Visa and Mastercard) react," said Kevin Morrison, senior analyst at Aite Group. The move could give them cover to scale back further on little-used benefits, he said.
While these card issuers already cut back some card benefits a couple of years ago, they could also use the move as an opportunity to hype their benefits more and maybe win over more users.
Discover users commenting on the FICO forum message boards had mixed reactions to the news.
"Personally I don't care as I would not charge anything that would require any of those benefits to Discover," said commenter "bz386."
To which "kevinjjc" replied, "Not good, I won't be using my Discover card for big purchases."
Said "Credit_hawk," "They are axing a lot of them [benefits] and I wonder how they intend to stay competitive when as some mentioned even the most basic of cards offers these protections like 2nd party rental insurance and purchase protection, etc."
Discover to keep security benefits
In its announcement, Discover noted that it will continue to offer and invest in free benefits including price protection, around-the-clock account monitoring, FICO credit scores and Social Security number alerts for cardholders to check if their identifying details are being passed around on risky websites .
"We will continue to offer and invest in the many free benefits in which Discover cardmembers find the most use and value," the statement said.
See related:Will identity theft monitoring be the next big card perk? , Compare credit card extended product warranties , Credit cards that offer free credit scores