Have you ever been in your local BestBuy and had the sales associate make you feel like a total paint sniffing idiot for not purchasing the extended warranty? They’ll typically tell you about the high fail rate of your product (which is strange as they just convinced you it’s a good buy) and how the warranty can provide you with some nice piece of mind.

DON’T FALL FOR IT! Extended warranties, especially on consumer electronics, are nothing more than a nice way for the store to pad their pockets with some extra cash. The truth of the matter is most warranties are never used and they often have very stringent terms.

So this Frugal Hack deals with a completely free way to get a warranty on your purchases.  The bottom line is that it’s all about the plastic you swipe at the checkout register as some credit cards automatically come with a warranty on the products you buy.

Electronics Have a VERY Low Fail Rate

First, let’s back the truck up a little bit and explain in detail why an extended warranty is generally a bad buy these days. The bottom line is that electronics, especially new TVs, just don’t break much anymore. According to my frugal guru Clark Howard, “Consumer Reports says that electronics seldom fail. In fact, TVs only fail at a three percent rate in the first four years of ownership. Why would anyone buy a warranty when you have a 97 percent that your TV will work for numerous years?” Amen Clark.

Check Out the Stores Return Policy

Be aware that many stores have a return policy much better than the standard 30 days that will act as a free quasi extended warranty. For example, Costco has a lifetime return policy on all products except for consumer electronics (90 day policy). The 90 day return policy on electronics is nothing to scoff at. Other stores that also offer a liberal 90 day return policy include Walmart, Sears, Target, and Home Depot. Even better than that are stores like Kohl’s, REI, LL Bean, Zappos, and Nordstrom which have NO time limits on returns.

So…Which Credit Card is the Best?

Here is where your bread is buttered. Below is a breakdown of how the major credit cards stack up in terms of extended warranties. Hint: Get an American Express card.

• American Express – AmEx simply has the best offer going. Anything you purchase, including a HDTV, Furby, spittoon, Rolex, is covered for exactly 1-year past the manufacturer’s warranty. Want to avoid the annual fee that AmEx often sticks you with? Consider the Costco AmEx card which has no annual fee with a paid Costco membership. The card offers you 3% back on gas and 2% back on Costco purchases which will often cover the cost of your Costco membership. Bonus Tip: American Express also offers full rental car insurance. Ding, we have a winner!
• Visa (Signature Cards only) – A while back Visa went to only offering a 1-year warranty on purchases made with cards in their “Signature” series. So if you are looking to open a Visa card, check into opening one that does indeed offer the 1-year warranty beyond what the manufacturer offers.
• MasterCard – They’ll also extend a warranty up to a year but only if the maker of the product doesn’t already offer a 1-year warranty. Confused? Yeah, me too. Also, they will NOT double the warranty to 2 years if it already comes with a 1 year warranty.
• Discover Card – Discover will also “extend up to 1 additional year of coverage to your existing warranty of 36 months or less.” Similar to AmEx, they also offer rental car insurance.

Ask the Reader: Have you ever taken advantage of the extended warranties offered by credit card companies? Was it an easy process or a hoop-jumping nightmare?

By Kyle James