02/08/2011 05:19 pm ET Updated May 25, 2011

Premium Return Protection for the Impulsive

Impulse buyers all over can breathe easier thanks to a new service from American Express, Premium Return Protection. This program could save you from mistakes worth up to $600 per purchase, if you've gone past the "must return in 30 days" limit. While there are terms and conditions to look out for, it does work for most jewelry, clothing, electronic equipment, DVDs or software.

With premium protection, you have up to 180 days to take an item back, rather than the 30 days or fewer that retailers frequently offer. This protection covers up to $2,500 per year, at no more than $600 each instance. The return coverage on most American Express cards only protects you for 90 days, to the tune of $300 per situation and up to $1,000 per year. This can be quite convenient in a pinch.

Premium coverage functions better than the standard Amex return protection in other ways too - for example, restocking fees. Have you ever bought a shiny new Apple computer, only to find out with two hours that another version was going to be released the next week? Well for open Macs, Apple bills a 10% restocking fee - not cheap since these computers typically run $1,500 or more. That fee would be fully covered with the new service.

"We believe we offer the only return protection program that covers restocking fees," states Leah Gerstner for American Express.

Non-membership has its benefits, too

There's no need to be an American Express cardholder to register for Premium Purchase Protection. Amex states that their annual fee for the service, $49.99, "will cover purchases made in the United States with any credit, debit or charge card from any financial services company."

Shipping is also covered: $20 per purchase and up to $100 per year. This is considerable for those of us who like online shopping, but don't like the cost and hassle of returning things by mail.

As you probably suspect, there is small print to be aware of. For instance, you have to send a photocopy of your receipt. Also, the clothes you return must not have their original tags removed, DVDs or computer software must be in the original packing, and electronics must be in good working order to be accepted. But this is pretty standard with most return policies.

Before you rush to sign up

Obviously, making money is a priority for rewards credit card giant American Express. You can be sure that the average amount they usually refund is much less than the $49.99 they charge. Moreover, it can be assumed that the Amex statisticians know that those most likely to register for this policy are probably already impulsive shoppers. So before signing up, it's important to stop and ask yourself the following question: how do they make money with this program?

American Express may have great resale agreements that make it easy for them to give you this policy at an affordable price, but the truth is, you are probably going to use the service a lot less than you initially estimate. Most impulse buyers will probably rely on the return policy of the store as a first line of defense. More likely than not, you would choose to return any clothing that doesn't fit, with the tags attached, before the retailer's return policy expires. This is the easiest way, and saves you from mailing items and sending receipts by fax.

You're also less likely to leave a DVD or computer software unwrapped and unused for more than 30 days, before you choose to send it back. Remember that if these are opened, the items will be disqualified from the premium return coverage and any other return policy.

And even though Amex's new service also covers items like exercise equipment, small appliances, and home decorations, the maximum shipping refund is $20 per occurrence. So anything this heavy that is also relatively inexpensive, is most likely not worth returning.

Don't underestimate pure laziness either. Most people who like to buy inexpensive and impulsive items online probably won't be bothered with submitting paperwork just for the sake of a refund. And in any case, the point is moot for most shoppers, since Amex card members already have 90 days of cover at $300 per incident, with no additional cost.

Only the most irresolute shoppers need apply

If you are unusually dissatisfied with your purchases, especially those made at online shops, or if you have piles of unworn clothes with the original tags still attached, then this program might be worth a try. However, most people can probably save the fifty bucks and stick with traditional return policies.

This post comes from Tim Chen, CEO and founder of, a website dedicated to helping consumers compare low APR credit cards.