In-Store Warranties vs Alternatives

warrantiesSo now that the holiday shopping season is kicking into high-gear, you are probably preparing yourself for the onslaught that comes along with it. I’m not talking about the barrage of commercials or the endless amount of advertising flyers in your mailbox. I’m not even talking about the overcrowded parking lots or stores. I’m talking about the ever-annoying question when the cashier begins to ring up your digital camera, laptop, smartphone, tablet or other big ticket item.

You know the one I’m talking about. “Would you like to purchase our extended warranty and add two years to your manufacturer’s warranty?” Yes, it’s easy enough to say no and walk away unscathed. But if you are not prepared ahead of time, there is often that nagging voice in the back of our mind that creates a moment of doubt. And in that doubt – that time of weakness – we are prone to succumbing to the in-store warranty trap.

I’m here to give you the knowledge you need to hush that voice of doubt and give you the confidence to walk away knowing that there are better options out there to protect your holiday purchases. In all seriousness, the best way to make sure you get the right coverage with an extended warranty is to do your research before you hit the stores. You can start that research right here.

Third-Party Warranty Providers:

An alternative to in-store warranties can be found online at third-party warranty providers like SquareTrade or ElectronicWarranty.com. Both of these options are considerably less expensive than their in-store counterparts. In fact, those savings can run anywhere from 40% to 70% less on warranties of the same length on the same purchased items.

These two third-party warranty providers deliver other benefits as well. An obvious one is that you can make your purchases online and still find a warranty to protect your product. Others are the wide-range of coverage that you can choose from and the fact that you can obtain warranty coverage for refurbished and used items you purchase online. Lastly, a quick glance at the customer satisfaction rating and reviews of SquareTrade on ResellerRatings.com shows that the majority of consumers are happy with the service they received from the third-party provider.

Credit Card Warranty Protection:

A second alternative might be one that you never think about, but it is also one that might – without you even knowing it – have your product covered regardless. Credit cards offer extended warranties for their card holders. And in fact, these warranties cost consumers nothing out-of-pocket while often extending a manufacturer’s warranty up to 12 months with coverage up to $10,000.

Be mindful, however, that Visa and MasterCard extended warranties are provided by the financial institution that issues the card. Some issuers may offer extra protection and some card issuers may offer none. So, if you are like many consumers with multiple Visa or MasterCard credit cards, you need to read the fine print and see exactly what kind of coverage each provides.

American Express and Discover are the best bet if you decide to look to your credit card for additional warranty protection. Not only do these two companies offer every cardholder the benefit of a warranty that goes beyond the protection provided by the manufacturer, but they also are the two highest-ranked credit card extended warranty providers based on a study from card comparison site CardHub.com. Make sure you read all the fine print no matter which credit card you choose to use so that you know exactly what type of protection you will receive.

Tips from the Experts:

Jim Wang from Bargaineering: “Assess how risky I am as an owner. If it’s for a television and something that I don’t intend to move much, I’d self-insure. Find out how much it costs to get the extended warranty and then “pay myself” into a savings account. If it does break, which I think is extremely unlikely, I’ll have some savings to help pay for the fix or replacement. If it’s something I might break, then I’d pay for a third party insurer like Squaretrade. I’d never buy the warranty from the retailer.”

Mitch from Top Finance Blog: “I’d say that most extended warranties are a waste of time because you’re paying a lot of money for something that’s not worth it. Most appliances and other technology comes with a warranty already that’s pretty good for anywhere from six months to a year, which is when most things go bad if they’re going to go bad. If there’s something you know nothing about, such as computers or laptops, it’s pretty much the same thing. I think once you get up into products that cost a lot and are hard to maneuver around, such as 50″ or bigger flat screen TVs, or even cars once the normal warranty goes out, then it’s a good deal. But paying for a warranty on anything less than $300 just takes money out of your pocket needlessly.:

Phil Taylor from PT Money: “I recommend following your original intent when making purchases. If
buying an extended warranty was part of your plan when you were researching the product, then by all means make the educated decision to buy your warranty if it makes sense. But don’t decide to get a warranty at the register when you’re first presented with the idea and forced to make a quick decision. Just give them my favorite line with a smile: “not today, thanks!” One of the few areas where warranties or insurance ends up making sense is with expensive phone purchases (as part of a plan). Without a new contract to sign a replacement phone is going to cost you 3x-5x as much.”
Now that you armed with this knowledge, you can give that cashier a confident, polite “no thanks” next time you are asked to purchase an in-store warranty. My advice to you is to check out those credit card extended warranty details, choose one with the best coverage, leave the car in park, and take care of that holiday shopping from the comfort of home. Then take money you saved by not buying the in-store extended protection on yourself. You deserve it.

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