Five top credit card freebies

Credit card providers often try to you lure you in by offering free financial benefits - but which ones are actually worth having?

Last week's launch of the new Egg Money MasterCard got me thinking.

For anyone new to Egg Money, the card offers 1% cashback on all purchases, plus a whole array of extra benefits, designed, as the eggheads at Egg Money put it, to give people 'real value' from their flexible friend.

The catch? You have to fork out £1 a month (if you're a new customer), which many say is the shape of things to come in the credit card world.

The price of benefits

The truth is, credit card providers have been flogging free extra benefits for years, many of which we don't even know about.

However, not all providers have been so generous. Credit card Goliath Barclaycard withdrew several of its perks, including price promise, its extended warranty service and travel accident insurance back in 2005.

It decided to focus on benefits such as identity and fraud protection instead, which, in my opinion, offer much less value.

Thankfully, there are still some providers which still offer a range of useful benefits, all of which are free of charge.

Here are four popular card issuers, and the extras they offer:

1. Purchase protection

What is it?

Purchase protection covers items against theft, damage, and sometimes loss, for around 90 days after the date of purchase.

What do I need to know?

When it comes to perks, every provider has slightly different terms and conditions, so it's worth taking a look at what you're covered for.

For example, both MBNA, Virgin Money and American Express do not cover against loss of your item, while Egg and Nationwide will. But you'll have to pay for the whole item with your credit card in order to qualify for purchase protection.

This usually applies to all the benefits mentioned.

Remember, you automatically get Section 75 protection under the law anyway. This entitles you to a full refund from your credit card provider when the goods or services you buy are not as described, or do not show up (perhaps because the company went bankrupt). In this case, your purchases are covered even if you only pay for a fraction of it with your credit card (as long as the price is £100 or more). Find out more

2. Extended warranty

What is it?

One benefit highlighted by lovemoney.com reader, COUGHLAJ, in the comments on my Egg article last week was extended warranties. If you buy goods over a certain amount with Egg Money, you'll qualify for an extra 12 months' warranty once the manufacturer's one expires.

Egg's deal covers all electrical items costing more than £50, but it isn't the only provider to offer this.

Nationwide offers extended warranties on many gas and electrical items that cost over £50, while if you own a HSBC Premier credit card, you'll get two years extended warranty on a range of items valued between £50 and £1,500.

What do I need to know?

This is a really useful credit card benefit, but don't assume that your goods are covered automatically. If you're a Nationwide cardholder, you'll need to register your purchase within 60 days of purchase, and HSBC customers need to register items within 90 days.

Egg Money says customers are automatically covered, so you don't need to do a thing except keep hold of your proof of purchase.

Remember too that certain items aren't covered. For example, Nationwide will not cover mobile phones, computers and other peripherals such as printers. Read your policy carefully to see which items qualify.

3. Travel accident insurance

What is it?

Travel accident insurance is one of the most common freebies you'll get with your credit card. The insurance pays out if you have an accident which causes permanent disability or death.

It's a pretty grim benefit, and one I'm sure none of you would ever want to claim, but it's useful all the same. Amounts paid vary depending on provider. You can read more by clicking the relevant links in the table above.

What do I need to know?

The most important thing to remember with travel accident insurance is that it is NOT a substitute for comprehensive travel insurance.

Always make sure you get adequate travel cover, as the bills can quickly mount up should anything happen while you're on holiday.

4. Price Promise

Finally, for all the free benefits on offer, I think Egg Money offers two benefits that a rarity in the credit card world.

The first is Price Promise, where if you buy an item with your card that costs more than £50, and then find it cheaper within a 30 mile radius inside 30 days, they'll refund the difference.

You can claim up to £375 per item, and up to four items per year. Although in order to qualify, the items must be bought from a shop, as internet purchases aren't covered.

5. Event cover

The second worthwhile benefit offered by Egg Money is called 'Event cover'.

Concert and event tickets aren't usually insured under standard purchase protection policies, but with Egg money, if you pay for an event ticket that costs more than £20, then can't attend the event, you can get a refund through Egg of up to £100 per event per Cardholder.

You can claim up to four tickets per year, as long as you notify Egg within 30 days of the event taking place.

Just remember that the benefit only covers the cost of the ticket, and not hotel or travel arrangements. Oh, and it doesn't cover tickets bought privately, or through ticket touts.

At the end of the day, I still think these benefits should be treated as the icing on the cake, and not a reason why you should get a credit card in the first place.

I think 0% deals and low interest rates should still be the driving force behind getting a credit card. If you look at the money you'll save by using credit cards to your advantage, you will probably find you can buy these benefits ten times over.

Still, it pays to know your flexible friend is working hard for you, even if you didn't know it!

More: Six golden rules for credit card spending