The next time a cashier asks you whether you’d like to buy the “extended warranty,” you might be better off saying no.
If you’re paying with a credit card, there’s a good chance that you’ll qualify for extended warranty coverage at no extra cost. Here’s how it works.
What is an extended warranty?
The extended warranty offered by your credit card typically adds up to a year of additional coverage to eligible purchases. It mirrors the terms of the original manufacturer’s warranty — for example, if the original warranty covers only manufacturing defects, then the extended warranty will do the same.
Charge the item to your card that offers the coverage, and save your receipt and the product’s warranty documentation. If the product breaks after the original warranty expires, you may still be able to be reimbursed from your card’s payment network — MasterCard, Visa, American Express or Discover — via statement credit or check.
These extended warranty policies don’t cover all credit card purchases. Computers, cars and items without manufacturer’s warranties are generally excluded, for example. But if you have a broken dishwasher or a malfunctioning video-game console, you’ll likely be eligible for reimbursement.
Why your credit card’s extended warranty is a good deal
Extended warranties offered by retailers — which are generally different types of service plans — tend to be expensive. A study by Consumer Reports found that the median price for a service plan was $123 for a large appliance and $37 for a small one. Most products didn’t break in the service plan window, and even people who had repairs made under the service plan didn’t save much money compared with people without the coverage, the findings showed.
To save some money, consider relying on your card’s complimentary extended warranty policy instead. Check your credit card’s benefits to make sure your purchase is eligible for coverage before skipping the service plan.
What paperwork do I need?
To take advantage of your card’s extended warranty policy, you generally need to supply these records with the completed claim form:
- Original store receipt
- Account statement showing credit card purchase
- Copy of manufacturer’s warranty
- Other warranty or service plan policies, if applicable
Once you submit the forms, the payment network’s examiner will approve or deny your claim. The examiner may request more documents — for example, repair quotes — if you’re filing a large claim. Generally, smaller claims are processed more quickly.
Each payment network has online warranty managers, where you can upload images of your receipts and warranty coverage to your profile. You’re not required to register products this way, but having your documents online can make it a little easier to file claims later.
Extended warranties, compared
NerdWallet compared extended warranty policies from each of the payment networks — American Express, Discover, MasterCard and Visa. Here are the major findings:
- American Express offers the most thorough coverage, extending warranties of five years or less for up to a year on all cards. It does not exclude wear and tear.
- All networks exclude motorized vehicles (cars, boats, etc.) and computers.
- American Express and Discover reimburse you with a statement credit, while Visa and MasterCard send you a check in the mail.
While benefits are generally the same across a payment network, policies sometimes vary by issuer and card. Check your card’s terms and conditions to find out about your card’s policy.
|Source||American Express extended warranty terms||Discover extended product warranty terms (requires log-in)||Visa Signature card benefits||MasterCard Guide to Benefits|
|Eligible cards||All||All||Visa Signature cards||All|
|Maximum extra time offered on original warranty, in years||1 (3 for Centurion members)||1||1||1|
|Maximum duration of original warranty, in years||5||3||3||1 on standard cards, up to 5 on World cards (varies by issuer)|
|Maximum coverage (per claim/ per year)||$10,000/ $50,000||$10,000/ $50,000||$10,000/ $50,000||$10,000/ no limit|
|Is wear and tear excluded?||No||Yes||No||Yes|
|How do I file a claim?||Call 800-225-3750 within 30 days of loss.||Call 800-DISCOVER (800-347-2683) within 45 days of loss.||Call (800-882-8057) within 60 days of loss.||Call 855-569-7366 within 60 days of loss.|
|How long does it take? *||Your account will be credited with a reimbursement within 14 business days after the examiner receives the paperwork.||Your account will be credited with a reimbursement within 60 days after the examiner receives the paperwork.||Within five days of receiving the paperwork, a customer service rep will follow up with you. If the request is approved, you’ll get a check in the mail within seven to 10 days.||Depending on the size of the claim, it could take between seven days and a few months to get a claim approved and receive a reimbursement.
*When the information wasn’t available in the terms and conditions, we asked customer service representatives. Answers current as of September 30, 2015.
Top cards for extended warranties
American Express tends to offer the best extended warranty coverage. If you’re interested in this protection, here are a couple of cards that might be a good fit for you.
Blue Cash Preferred® Card from American ExpressBlue Cash Preferred® Card from American Express offers considerable long-term value. It earns 6% cash back at U.S. supermarkets, on up to $6,000 in purchases per year (and 1% after that). You’ll also get an unlimited 3% back at gas stations and department stores and 1% everywhere else, while taking advantage of American Express’s inclusive extended warranty policy.
If you’re making a big purchase soon, it’s also a good pick, because it comes with an introductory APR of 0% on Purchases and Balance Transfers for 12 months, and then the ongoing APR of 13.74% - 23.74% Variable APR. There’s also a sign-up bonus: Limited Time Offer: Apply by 5/3/17 – Earn 10% cash back on purchases at U.S. Restaurants in the first 6 months, up to $200 back. Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. Terms Apply. The annual fee is $95, but if you spend $31 a week at the supermarket, you’ll come out ahead on it.
Starwood Preferred Guest® Credit Card from American ExpressStarwood Preferred Guest® Credit Card from American Express comes with a generous sign-up bonus: Earn 25,000 bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months. Terms Apply. NerdWallet calculated that each point is worth 2.3 cents when redeemed for hotel stays.
Aside from taking advantage of American Express’s top-notch extended warranty policy, you also earn travel rewards with this card, getting up to 5 Starpoints per dollar on purchases at participating SPG hotels, 2 Starpoints per dollar at Marriott Rewards properties, and 1 Starpoint per dollar on all other purchases.
If you travel frequently and stay at SPG hotels, that could quickly add up to several free stays. The annual fee is $0 for the first year, then $95.
The bottom line
Your card’s extended warranty coverage could save you hundreds or thousands of dollars when your purchase breaks down. Hold onto those receipts and warranties, and you’ll be able to file a claim without much hassle.
Image via iStock.