What is Price Protection?
Price protection is an agreement between a buyer and a seller whereby the parties agree to fix the price of a good or service for a specific period of time.
How Does Price Protection Work?
In practice, price protection (sometimes called purchase protection) is a feature of many credit cards, whereby customers can get a refund on purchases made with the credit card if the price of those purchases goes down within a certain time frame after the purchase.
For example, if you purchase an airline ticket to Orlando for $750 on January 1 with a credit card, but then the price falls to $500 on January 23, a price protection guarantee in the credit card contract entitles you to a $250 refund from your credit card company.
Why Does Price Protection Matter?
Price protection is a way to induce sales by easing customers' uncertainty about price changes. As such, price protection is more effective for goods and services whose prices change frequently. Though it is a common component of credit card agreements, it is generally not well-known.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
If you are sitting with a loss on a fundamentally sound investment, what can you do?Here are some options:...Read More →
When you were a child, security items probably filled your childhood with peace of mind. Things like a blanket, stuffed animal or pillow might have protected you from monsters under the bed or...Read More →