It’s a classic complaint: Your purchases somehow find a way to break right after the manufacturer’s warranty expires. One option is to pay extra for the extended warranty coverage that many retailers aggressively sell at checkout. Money expert Clark Howard never does this! Instead of paying more, you could rely on the extended warranty coverage offered by most credit cards.
How your credit card’s extended warranty coverage works
Many credit cards come with some sort of extended warranty policy. Typically, these policies will add a year to your manufacturer’s warranty of three years or less. However, you need to look into the details of a credit card’s policy to find out what it’s limits are. For example, most policies will not cover certain purchases such as used goods, medical equipment, commercial goods and motor vehicles and parts. And to be eligible for this coverage, you’ll have to pay for the purchase with your credit card.
To file a claim, you will have to notify your card issuer and provide documentation, like a copy of your card statement showing the charge, the store receipt, a copy of the original manufacturer’s warranty and a repair order. The credit card’s benefits administrator will then reimburse you for the claim, up to the amount of the purchase price.
Finally, there are limits to the amount of the coverage. Some credit cards will have fairly modest limits of around $1,000 per claim, while others will have larger limits of up to $10,000 per claim and up to $50,000 total per account. The limits on the policy will often determine which cards are the best.
The best credit cards for extended warranty coverage
Costco Anywhere Visa card from Citi: It’s no secret that we here at Clark.com are huge fans of Costco and the Costco Anywhere Visa card from Citi. Not only is this an exceptional rewards card, but it has a little known feature that makes it one of the best cards for extended warranty coverage. This is the only card that offers two years of extended warranty coverage on all purchases. The coverage is valid on top of our manufacturer’s warranty of up to five years. There’s a limit of $10,000 per item, and it excludes many things that you might expect: boats, cars, aircraft and other motorized vehicles, as well as plants and live animals, and items purchased for commercial use. There’s no annual fee for this card with your paid Costco membership.
Chase Freedom and Freedom Unlimited: In general, you can expect more generous extended warranty coverage from premium credit cards with expensive annual fees, but not with Chase. Both its Standard Freedom and Freedom Unlimited cards have no annual fee, but they come with the same coverage found on the $450 Sapphire Reserve. This coverage has a limit of $10,000 per claim and $50,000 for the life of the account. That will cover a few defective televisions!
American Express cards: All Amex cards, from their no-fee Blue Cash and Everyday cards to their $550 Platinum card, come with the same coverage. You are covered for up to $10,000 per claim and $50,000 total per calendar year. This coverage lasts for one additional year for items with a manufacturer’s warranty of up to five years.
All other Visa Signature cards: Any card that’s part of the Visa Signature program will cover you for up to $10,000 per claim and $50,000 total per calendar year. This coverage lasts for one additional year for items with a manufacturer’s warranty of up to three years.
Tips and tricks for using extended warranty policies
1. Learn what’s covered by your card, and what’s not. To find out everything you need to know about your card’s coverage, read it’s Guide to Benefits, which you would have received with the card. But if you threw that away, don’t worry. You can usually find this document online and you can always request a new one from your card issuer.
2. Save your receipts. Whenever you purchase an item that’s eligible for extended warranty coverage, be sure to keep the receipt. I like to create a small file with the purchase receipt, the original warranty and a copy of the statement of the credit card I used to make the purchase.
3. Don’t hesitate to file a claim. In my experience, these claims are usually granted, so don’t think twice when you have something that breaks within the extended warranty’s time frame.
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