Should You Take Points or Cell Phone Insurance?

I always try (I’m sure you do as well) to earn the highest rate of rewards I possibly can. For most transactions, this would be 5x(5%), with the occasional bonus to earn a little more. Recently, there has been one area I have thought about forgoing extra points though, that’s cell phone insurance.

Should You Take Points or Cell Phone Insurance?

Cost of Phones:

I’m sure you’ve noticed, but the prices of phones are outrageously expensive now! If you have been reading on the new iPhone 8, the rumored cost is going to be over $1,000. You read that correctly, over $1,000 for a cell phone ($999.99, is still $1,000 in my book).

Even the new Samsung S8 is over $700 and the Google Pixel 2 seems to be rumored to be anywhere from $650 to Iphone price!

I think it would be foolish to think these phones will decrease in price as more features are introduced to these devices. Of course, you can buy older models, used phones, or even try a company different than the big dogs.

To think in monthly cost, if you were to buy a new iPhone 8 at $1,000 and pay for it over 24 months, your payment would be $41.67 per month for 24 months.

Now, what if something happens to your precious device? You break the screen, it’s stolen, or you drop it in the toilet?

You could pay the insurance cost through your cell phone provider, but you could actually be spending more money than you need.

Cost of Insurance:

When you buy a phone, the cell phone companies really try to sell you their insurance plans:

[wpsm_comparison_table id=”18″ class=””]

These cost can really add, for that “just in case moment.” If you don’t have insurance and something happens, you could find yourself in an expensive predicament.

If you start adding up the numbers for the monthly fee and deductible, you are close to paying for half (or more) of a new phone!

There was a time when I paid for insurance for my phone. That was until  I needed to use it and my phone insurance didn’t cover it, so I stopped paying for it since that happened.

Thankfully, there are credit cards that offer this benefit. I can only hope this list grows (I’m confident it will as companies try to compete with each other), but at this time it is limited.

Credit Cards Offering Insurance:

All of these credit cards do not cover lost cell phones, or ones that disappear in mysterious ways. I didn’t put that in this chart.

Exclusions for these benefits:

There are a list of exclusion criteria for these benefits.

• Well Fargo Exclusions
• Chase Exclusions
• US Bank Exclusions 

Points Earned:

After looking at the cards that offer cell phone insurance, the next question would be about points. Many people put their phone bills on a card that earns 5x, because we want to maximize our earnings. I currently do the same, but is doing that really the best option though?

Chase Ink Cash/Plus

I’ll take my own personal cell phone bill as an example. We have 4 lines on our plan, totaling around $200 per month. I currently pay with my Chase Ink Cash, which earns 5x. I also receive no cell phone insurance from this card.

• $200 x 24 months x 5 UR points/dollar = 24,000 UR points over 2 years. That’s not a bad haul but it’s nothing spectacular. Even if you value those points at 2 cent per points (I think you’re overvaluing them there), then you have about $480 value in points.

If in that time your phone breaks, or is stolen, well at least you’ll earn 5x, right?

Chase Ink Preferred:

Now if you were to use a card like the Chase Ink Plus, which earns 3x on your cell phone bill

• $200 x 24 months x 3 UR points/dollar = 14,400 points over 2 years. That not nearly as impressive, and when you account for the annual fee the value is around $200. You do gain the cell phone protection though, which can have an added benefit of up to $600 per claim (with $100 deductible). That does add value though if you were to need it.

If you used it just once over the 2 years, you already out gained the value you received in points from earning 5x.

Wells Fargo:

I think for Wells Fargo, the best card to use would be the Cash Wise. The Wells Fargo Cash Wise earns 1.5% cash back on all purchases. This is definitely not a stellar earning rate.

• $200 x 24 months x 1.5% = $72. This is by far the least amount of rewards you will earn from either the Ink Cash/Plus, or Ink Preferred. The cell phone protection benefit is up to $600 per claim (with $25 deductible).

US Bank Visa Platinum

The only reason to get this card in my opinion is for the cell phone benefit. This card earns nothing for rewards. Hopefully we see US Bank extend this benefit to the US Bank Altitude Reserve.

Deciding between Points or Protection:

This will definitely vary based on person. I can see the reason for both sides. Just in my own personal case, these are the phones we have on our plan:

• Iphone SE 16 gb- Cost to replace $399
• Google Pixel 32 gb- $649
• Iphone 7 128 gb-  $749
• Samsung Galaxy S4- No Idea since it is models behind, but odds are they’d have to buy a new phone.

Total amount of money to replace phones: $1797+. Since I can’t put a number on the S4, it would probably be over $2,000 total since they’d have to buy a new phone.

That is a lot of money in phones! If you were to earn 5x it would takes YEARS to earn enough points to equal the cost of these phones.

If you look at the coverage of these credit cards protection plans, they are up to $600 (minus the deductible). So the wouldn’t even cover the cost of all of the phones, but it would definitely take the sting out of it.

Reason for Points:

This is definitely not an all-inclusive list, but these could be some reasons you could choose points over protection.

• You don’t mind shelling out $650+ for a new phone if yours were to break
• You overvalue your points
• Your bill is large and you earn a substantial amount of points to cover a new phone. For myself, I would consider that around $600 in cash equivalent.
  • At 5x, this would mean spending around $12,000 per year on your cell phone bill.
  • At 3x, this would equate to $20,000 per year.

Your requirement could definitely be different than mine. I am calculating if you had to cash out your points to buy a new phone.

Reasons for Protection:

Again, not all inclusive, but a few reasons why protection could be your top choice.

• You couldn’t afford spending another $650+ on a new phone.
• You’re someone/have someone on your plan who has a previous history of breaking their phone
• Your bill isn’t large and the point totals don’t exceed cost of a new phone.

This list could be much larger, but it really depends on what you want from your credit card, or if you prefer points.

Which Card to Choose?

If you are happy earning 5x from Ink Cash/Plus and don’t really worry/care about cell phone insurance, then continue using that card.

I think out of the Wells Fargo protection and the Chase Ink Preferred, the Wells Fargo cell phone insurance is better.  This is mainly due to the fact of a $25 deductible vs $100 deductible. In addition, the Wells Fargo card has no annual fee, another savings of $95 per year.

For earning potential, clearly the Chase Ink Preferred is superior at 3x UR points. Also, you should take into account the $95 annual fee. If you only put your cell phone bill on this phone to earn 9500 points (to offset annual fee), you’d need to spend $263 per month. That seems like a pretty heft amount of money to put on a card to break even.

Although the rewards don’t seem as lucrative, earning 1.5% cash back with Wells Fargo, isn’t terrible. The fact it is a fee free card with a killer benefit of cell phone insurance is quite awesome.

I personally would tend to lean towards the Wells Fargo cards over the Chase Ink Preferred, since I don’t spend enough to recoup the annual fee on the Ink Preferred.

Of course you should run your own numbers to see which one works best for you!

Conclusion:

I think as credit cards offer more benefits, we need to see more than just the point earnings from them. The point earnings can be very great to help plan our next trip, but it could cost us more when considering annual fees.

Cell phones are becoming more expensive each year as more features are added to them. The cell phone protection benefit is one that can save you money when you need it. I hope we will see this benefit expand to more cards in the future, since I think this is a benefit forgoing extra points on.

Do you think cell phone protection is worth earning less points? Have you considered this benefit?