Warranty

4 Reasons Credit Is Safer Than Debit

Jason Steele — Mon, 13 Feb 2017 10:00:10 +0000

A debit and credit card may look the same, but they offer very different services. One takes money directly out of your bank account at the point of purchase. The other sends you a bill at the end of the month to pay for your transactions. If you're a Millennial who grew up during the Great Recession or someone else who's struggled with debt, a debit card may be your first choice for payment.

But overall, Americans increasingly prefer credit cards to debit cards. In 2016, credit cards for the first time surpassed debit cards as the favored payment method, according to the TSYS 2016 U.S. Consumer Payment Study. Forty percent of respondents chose credit cards as their most preferred payment type, compared to 35% who chose debit cards.

That makes sense from a security perspective. While debit cards have the advantage of preventing you from going into debt, they don't compare to credit cards when it comes to safety. Here's why.

More Types of Credit Card Transactions Are Protected by Law

Credit card users are much better protected by law. The Fair Credit Billing Act (FCBA) allows you to dispute not only fraudulent charges on your account, but also charges that are the result of merchant error. You can even dispute authorized charges and temporarily withhold payments — without harm to your credit score — if you are unsatisfied with the goods or services you purchased and the merchant won't refund your money. (The goods must be worth $50 or more and have been bought within 100 miles of your home in order to qualify for this protection.)

In contrast, debit cards are protected by the Electronic Fund Transfer Act, which doesn't cover disputes on authorized charges to your debit card, just unauthorized charges. (See also: Why Millennials Should Embrace Credit Cards)

Credit Cards Users Enjoy a More Generous Dispute Window

Legally, you've got more time to dispute a credit card charge than a debit card charge. The FCBA caps your liability at $50 as long as you dispute the transaction within 60 days of the date your billing statement was mailed to you. And there's no time limit for disputes if your credit card was included in a security breach.

With debit cards, your liability is also legally limited to $50, but only if you report the billing error within two business days of the transaction. The liability cap goes up to $500 if you report the mistake within 60 days, and you may not have any protections at all if you wait longer than that.

Fraudulent Credit Card Charges Don't Have an Immediate Impact

Should a criminal make an unauthorized charge or a vendor accidentally charge you the wrong amount on your debit card, your bank account will be immediately affected until you can resolve the problem. That's not so for a credit card. An accidental or fraudulent charge on your credit card will affect your available credit until you dispute it, but unlike a charge made on your debit card, it won't affect your ability to pay bills from your bank account. (See also: 7 Reasons I Use My Credit Card for Everything)

Credit Cards Protect Your Purchases Better Than Debit Cards

Credit cards often come with one or all of the following protective benefits on purchases.

Purchase Protection

If your purchase is stolen or accidentally damaged, this benefit can replace or repair it, or reimburse you for its cost. Policies vary, but some cover you for up to $10,000. (See also: How Credit Cards Protect Your Purchases From Damage or Theft)

Extended Warranty

Most credit cards offer an extended warranty policy that can add up to two years to the manufacturer's warranty of covered items. (See also: How Free Extended Warranty Works on Credit Cards)

Return Protection

There are times when you want to return a purchase, but the retailer will not accept it. Credit cards that offer a return protection policy may issue you a refund if you contact them within 90 days of the purchase.

It's extremely rare to find a debit card that offers you any of these benefits. (See also: Credit Cards vs. Debit Cards: A Comprehensive Comparison)

This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Free Extended Warranties Work on Credit Cards

Jason Steele — Wed, 25 Jan 2017 16:33:04 +0000

When you purchase appliances or electronics, the cashier will often ask if you would also like to purchase an extended warranty. This can be a tempting offer, since no one likes the thought of an expensive purchase breaking soon after the manufacturer's warranty expires. Thankfully, many credit cards include some form of extended warranty coverage that you can use instead of purchasing an additional policy. (See also: Why You Should Always Pay With a Credit Card)

How Your Credit Card Extended Warranty Works

When you make a purchase with a card that offers an extended warranty policy, it will stretch the manufacturer's warranty for eligible products. Typically, these policies will double the manufacturer's warranty up to one year for warranties of up to three years. Some American Express cards will allow additional coverage on warranties of up to five years, and select Citi cards will extend the warranty by a full 24 months. These policies don't actually make the manufacturer extend its standard warranty for you; rather they offer additional coverage provided by a third party that will repair or replace the item at its discretion.

How to File a Claim

Each issuer will have a different process, but you will need to be sure to keep your original receipt and a copy of the manufacturer’s warranty (which you can probably search for online). When you file the claim, you’ll most likely be asked for specific details about the product, such as its serial number, model number, et cetera. Have that information handy. Photos are always helpful.

Policy Details

As with any credit card benefit, there are exclusions and limitations. For example, these policies typically exclude motor vehicles and parts, malfunctions due to normal wear and tear, as well as used goods and services. There is also a cap on the coverage per claim, as well as per year. Typically repairs and losses are covered up to $10,000 per claim, with a $50,000 maximum per calendar year. (See also: The Secret Credit Card Perk That Saved Me $300)

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This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Times Buying the Extended Warranty Makes Sense

Mikey Rox — Mon, 23 Jan 2017 10:30:26 +0000

Every time you make a big-ish purchase — like a TV, home appliance, or automobile — you're offered the extended warranty. The extended warranty covers repair beyond the manufacturer's warranty expiration date, usually by a couple years, but it requires an additional fee. Most of us turn down this option on TVs and appliances as these items rarely break down before we're ready to upgrade. But it's wise to consider opting for the extended warranty in certain situations. Take a look at these five times buying the extended warranty actually makes sense.

1. Lawn and Garden Equipment

If you've ever owned lawn equipment — like a mower or a weed whacker (especially a weed whacker!) — you know how sensitive these machines can be. After all, they're sucking up dirt, grass, leaves, and all kinds of debris, which not only dulls the parts faster than other machinery, but the debris can become lodged in places it shouldn't be, thus causing the need for repair. Another reason these machines are prone to breaking down after a year or two of use is because they burn combustive fuel — the process of which degrades the parts over time.

Bryan Clayton, CEO of an on-demand lawn service called GreenPal, explains why an extended warranty for these types of products makes economic sense.

"When you take a $400 push mower to your local repair shop, the cost to repair it can exceed the cost of buying a new unit. The extended warranty for a new push mower usually runs about 10% to 15% of the cost of the unit, and if you plan on keeping it three to five years, it almost always pays off," he says. "For instance, the self-propelled drive mechanism of most Honda push mowers will go out after a year and a half to two years of use, and to repair or replace the drive will cost in excess of $300 with parts and labor; an extended warranty will cover you when this occurs."

As is the case with any extended warranty, be sure to keep all paperwork and receipts that pertain to the machinery. You'll get the work done faster without any pushback since you can readily prove it.

2. Cars

Two years ago, I purchased a used 2009 Volkswagen with about 75,000 miles on it. For the first year, everything was fine. This year, however, it seems like anything that could go wrong with this vehicle has gone wrong. Since August, I've had to replace all four tires, the mechanism that opens the driver's side door, the power-steering rack, and the serpentine belt. The car is in the shop every other week for something new it seems, and the repairs have cost me thousands of dollars.

Of course, I opted out of the extended warranty when it was offered, because I'm an idiot and I didn't want to spend the extra money. But in hindsight, I should have loosened my wallet. It would have saved me a lot of stress and unexpected expense.

Auto sales and leasing consultant Matt Tuers says, "Extended warranties from car dealers are big profit centers, but in many cases these products can save consumers a lot of money. This is especially true as modern vehicles comprise more and more intricate and expensive components and electronics. If you are planning to keep your newly purchased vehicle for longer than is covered by the factory warranty — in terms of years or mileage — these extended warranties can pay for themselves."

A typical manufacturer's warranty on a new vehicle covers the first three to four years, so if you plan to unload the car in less than four years, skip the extended option. If you plan to keep it until it decides it doesn't want to take you anywhere anymore, however, splurge for the additional coverage.

Purchasing an extended warranty for my vehicle would have only cost a few hundred dollars more, and I'm definitely kicking myself now.

3. Your "New" Used Home

If you're moving into a house with existing appliances, a home warranty may be a good idea to cover what's already there, like refrigerators and water heaters. You don't know what kind of wear and tear the appliances went through before you arrived, and you may not know how old they are or receive any of the previous owner's warranty information. Everything should be up to par at inspection, but you'll feel like a sucker if something goes on the fritz right after you move in. Besides, you have plenty of other expenses when buying a new home. The last thing you need is to replace an appliance you thought was in good working condition.

4. Home Improvement Projects

Last year I had my home re-sided, and the company that completed the work offered a warranty that covered the length of time I plan to stay in this house, so I opted out of any extended coverage. If you're planning any home improvements projects — like replacing your windows — anytime soon, however, and you plan to stick around for awhile, you should absolutely inquire about extended or lifetime warranties. These warranties are often built into the cost of the products, which may make them a bit more expensive than their competitors, so do your due diligence when comparing brands and what's offered.

5. Computers and Laptops

For the most part, computers and laptops hold their own. They're reliable devices, but there's a chance you could get one that's just a little off or crashes before you expected it. Case in point: The hard drive of my Mac crashed a few years ago, costing me about $300 in repairs — and they couldn't recover my lost data! I couldn't afford to purchase a new laptop at that time, so I had to submit to the repairs. But if I had purchased an extended warranty, I could have rested a little easier knowing that I didn't have to pay out of pocket for what seemed to me like a manufacturing defect. If you plan to purchase the extended warranty on a computer, plan to spend about 10% to 20% of the price of the device. Anything higher than that and you're paying too much.

A Note About Extended Warranties on Credit Cards

Most credit cards offer free extended warranties on your purchases. Look at your card agreement or call up your issuer. Find the credit card that offers the best policy on extended warranties (some cards have a lower per-claim maximum dollar amount, or lower threshold for extending the warranty) and use that for your next big ticket item.

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Can cheap AppleCare on eBay be trusted?

Torley Wong — Sun, 08 Feb 2009 13:39:43 +0000

After my previous article about too-good-to-be-true iTunes gift cards, I turned my attention to another discounted Apple item: AppleCare, essentially an extended warranty for your Apple products, including Mac computers and those omnipresent iPods. Like so much insurance, it promises "peace of mind". There's just one problem for many: the price.

Especially in today's recessed times, having to pony up to $350 (for the MacBook Pro) for 3 total years of tech support and phone coverage can be hard. That's why a lot of sellers are selling cheap AppleCare.

My AppleCare adventure

In my ongoing tradition to not recommend something unless I've done it first — helping you mitigate risks by diving through that unexplored portal beforehand! — I landed on eBay, and easily found numerous listings for discount AppleCare. I have a Mac Pro, and AppleCare normally costs $250, but I spotted it for $92 — that's $158 saved!

After some scanning, I paid 480sherry, who has a 99.9% feedback rating, and as of this writing is continuing to sell AppleCare. Surely those 2,200 buyers can't be wrong, right? In my own experience, I was pleased to receive a code less than a day afterwards.

That's right, just a code you enter at Apple's site along with your product serial number. I did so, then received an email "certificate" confirming its validity from Apple. No actual box, as is often the case — but I encourage you to scrutinize each seller, for some offer this option at a higher cost.

Does this mean you miss out on anything? Not really, since the TechTool Deluxe diagnostic suite, which would normally be bundled in the physical package, is a free download at Apple's site. You still need to burn it to DVD, which might be a problem if you're really not tech-savvy, but the software itself is included.

What's the real story here?

Unlike the distinctly more dubious world of iTunes gift cards, AppleCare is morally relaxed. I asked over a dozen discount AppleCare sellers how they managed to do it, the answers were consistent in most cases: they bought it in bulk and are passing the savings on. One fellow said:

We buy from dealers and other sources, some going out of business, some trying to reduce excessive inventories. Everything is 100% Apple, so no risk to you. We sell hundreds of these each month

Another reinforced:

I buy in bulk so I recieve a better price that the average person. There are no limitations. Thanks for looking.

Further research also substantiates this, altho as is par for the course, there's the usual skepticism. There've also been academic situations where teacher/student discounts are used. Outside of eBay, there are some strange sights, such as this guy hawking bulk AppleCare from Singapore, with the most thread self-bumps I've ever seen.

Conclusion

I've had no problems with my cheap AppleCare coverage so far: I haven't had a troublesome incident to put it to the test, but I haven't received a notification from Apple nullifying my cert either.

Provided that the eBay seller is backed by an excellent reputation as in my example, you could easily get AppleCare at a much lower price than face value. I only wish the same could be applied to the cost of Macs themselves. ;)

Have you had an adventure in cheap AppleCare? Do share!

This article is from Torley Wong of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: