Have you ever bought an extended warranty on a product — only to have it expire just before your expensive item breaks? According to Consumer Reports, retailers are likely to push buying an extended warranty on consumers because they are cash cows — earning up to 50 percent or more off of what is charged for these contracts.
Results from a Consumer Reports survey show that 73 percent of in-store shoppers have been pitched buying a service plan like an extended warranty. And the median price paid for a plan was $75 for an in-store purchase and $65 online.
But it’s not always a good idea to purchase an extended warranty. Why? Here’s something you should know: If you paid for your item with a credit card, you might not have to buy it again. Most major credit cards offer extended warranties on products purchased with their cards for up to a year.
There are many other reasons why you shouldn’t buy an extended warranty plan. How do you know whether or not spending more for a warranty is worth it? The answer is that it really depends, but there are certain signs you can look for when deciding what to do.
Take a look at these questions to find out whether a warranty is worth it for you:
- How much will it take to buy a new product? If the cost to buy a new product amounts to as much or around what you’d pay for a warranty, it’s not worth it.
- How much would it cost to repair the product? Before you buy the product do extensive research online to find out what problems are likely to occur with your item and the general costs of repair. If repairs aren’t that expensive in general, don’t buy the warranty.
- Are repairs covered by the manufacturer’s warranty already? If your product is covered by a warranty from its manufacturer, you might not need to buy a plan from the retailer. Check out the terms of your product’s warranty so that you can see what you’re covered for — determine whether buying a retailer’s plan will provide duplicate coverage you already have.
- What do online reviews say about your manufacturer? Some manufacturers cover products that are out of warranty or that have a defect affecting many customers. Check to see what kind of customer service the manufacturer has provided in the past. Along the same lines, check out review of the warranty. If you’re thinking about purchasing a plan from a third party, be sure to review what people have said about the company.
- What does your insurance cover? Your homeowner’s or rental insurance may cover certain items. Check out the terms of your insurance to find out what is covered.
- How likely is the product to break? If your product has solid reviews and looks like it’s durable, chances are that you don’t need to buy a plan.
- What “extras” are provided by the plan? Certain warranty plans may provide key conveniences that you may like, such as free on-site repair. If those “extras” appeal to you, it might be worth buying the extended warranty.
- What loopholes does the plan have? If the warranty plan doesn’t include coverage for problems you’re likely to experience, don’t get it. Some plans may not cover things like theft or accidental damage. So be sure to read the plan carefully, including all the fine print.
- What’s the price of the warranty and can you afford it? Sometimes it just doesn’t make financial sense to buy a plan.
- Does your credit card offer an extended warranty? As previously mentioned, items bought with your credit card could be covered by warranty. To file a claim for an extended warranty for a product you bought with your credit card follow these steps:
- Contact your credit card’s warranty processing center within an appropriate time frame. Check your card’s terms and conditions to find out how much time you have.
- Your credit card issuer will have to make sure that your product is covered. Products that might not be covered: refurbished items or cars.
- Provide documentation of when you purchased the item with an original receipt, your credit card statement and a copy of the product manufacturer’s warranty. Depending on the terms and conditions of your card and the warranty, certain things may be covered (and others won’t). Your card will not cover damage the original warranty doesn’t, for instance. And there could be exclusions to coverage based on things like wear and tear and accidental damage.