Black Friday Tip: Pay With The Right Credit Card to Avoid Extended Warranty Rip Offs

Retailers will be pushing expensive accessories, services and extended warranties on Black Friday in an attempt to make a profit off of cut-rate electronics. They are not selling TVs and laptops at 40% (or more) off for the fun of it. Buying an extended warranty is generally unnecessary, especially if you have a decent credit card.

Most laptops, HDTVs and other gadgets come with a one-year factory warranty. But some retailers will try and pressure customers into buying expensive extended warranties that last three years or more.We generally recommend buying these warranties, especially if you carry an American Express card or any other credit card with enhanced purchase protection.

Instead of buying an extended warranty, simply swipe your AMEX card at checkout and you’ll automatically double your gadget’s factory warranty.If you insist on buying one of those three-year warranties on Black Friday, you’re really only paying for one year of protection. What will your gadget be worth in three years? We recommend banking the cost of the extended warranty and saving it in case your gadget does go bad years from now.

If you damage your gadget, or if it’s stolen within 90 days of purchase, American Express will replace or repair it for you. Unfortunately, I know about this feature from first hand experience after spilling an iced tea on a brand new MacBook Pro. American Express gave me $1,000 to repair the computer, the maximum allowed under most plans. Those with certain American Express cards are protected for up to $10,000 per purchase.

Many premium credit cards offer features similar to those found with every American Express. A quick call to your credit card issuer will save you a lot of trouble on Black Friday.

Do not be intimidated by salesperson’s tactics. They often do not explain all of the details of the extended warranty programs. There are many horror stories of broken gadgets and computers not being repaired promptly or being replaced with inferior products. If you’re worried about dropping your new gadget or someone stealing it, things generally not covered by extended warranties, we suggest getting what you really need: insurance. Adding electronics to your homeowner or renters insurance policy is the most affordable option and covers more hazards than any extended warranty.

One example of this strategy in action is when I purchased my Nikon D700 and several lenses and accessories for approximately $5,000 before I traveled to India last year. I was somewhat nervous about taking such an expensive camera rig on planes, trains and busses in India, where a camera like that truly stands out to thieves. State Farm added the camera to my insurance policy for $50 per year. I asked for ‘Marine insurance’, which covers my camera gear anywhere in the world with no deductible at a cost of just 1% of the value of the insured equipment per year.

There’s only one reason that retailers push extended warranties: profit. They’re one of the worst purchases you can make this Black Friday. There may be rare exceptions to the rule, but generally the gamble doesn’t pay off. For every friend that raves about the ‘free’ gadget he got in exchange for his busted one after two years, there are dozens of others that never see any return on their extended warranty investment.

For more information about what you need to know before going Black Friday shopping, visit our Black Friday info page for more guides.