The Basics of Your Credit Card's Extended Warranty

Credit card extended warranties can protect your purchases -- but you need to understand how they work. 

Credit card extended warranties are a valuable cardholder benefit that provides you with added protection when you make certain purchases. Extended warranties are always free from your card issuer and they become available when you make an eligible purchase with your card. The specific policies vary by card, but many replicate the coverage of your original manufacturer's warranty for at least one additional year. 

Extended warranties come with certain exclusions, but can be very valuable if an item breaks while you're covered. But whether you're making a purchase or making a claim, there are a few key things to know about how your extended warranty works. 

What is a credit card extended warranty?

A credit card extended warranty provides coverage in case an eligible item breaks after the manufacturer's original warranty has ended. It extends the warranty coverage on your purchase for extra time -- sometimes up to two extra years. 

Say, for example, you buy a refrigerator for $1,200 using a credit card that extends your manufacturer's warranty for an additional two years. If the manufacturer's warranty covers parts and labor for a year and your fridge breaks after 18 months, you won't be protected by the manufacturer -- but your card would still cover you. So if your ice maker stops working because the water inlet valve is clogged, and you're told it will cost $300 in repair costs, your credit card should pay to get the ice flowing again. 

Many different credit cards offer extended warranties, including certain cards issued by American Express, Chase, Citi, and Wells Fargo. When it's offered, you do not have to pay for an extended warranty that is made available by your credit card. This can save you money as you can avoid buying additional coverage on expensive items. The median price for an extended warranty from a retailer is close to $80 according to Consumer Reports, so the savings can be substantial if you're able to avoid buying one and take advantage of your cardholder benefit instead. 

You do need to pay for the item with your credit card for it to be covered, though. And while you don't have to register items you buy to get protection, it can be easier to do so. Otherwise, you may have to come up with documentation several years down the line that you don't have any longer. 

What does your credit card extended warranty cover?

The specifics of warranty coverage can vary from one card issuer to another. Most duplicate the manufacturer's guarantee and cover everything the original manufacturer warranty covered. This can include parts and labor if an item breaks. However, there are per-claim and annual limits imposed by your credit card company, so if you've purchased a very expensive item, you may not have full coverage. 

What do credit card extended warranties exclude?

Credit card warranties typically exclude certain kinds of purchases including cars, antiques, computers, items you purchase to resell, or items that are purchased for use in a commercial setting. You won't have coverage from most card issuers for these and other items that are prone to breakage or that would be costly to repair. Credit card companies don't want to commit themselves to spending a fortune on problematic purchases you've made. 

Warranties also exclude specific costs and certain types of losses. For example, you usually won't be protected if your item is recalled, damaged in a natural disaster, or if a war causes damage to your item. You also won't be refunded for shipping or delivery charges or for diagnostic charges to identify the problem with the covered item. 

How can you find the best credit card extended warranty?

Since extended warranty policies can vary from one card issuer to the next, it's worth reading the marketing material and fine print carefully if you're looking for a card that offers a generous extended warranty. You'll want to look for:

• Coverage exclusions: What items aren't covered? What types of costs aren't covered? What kinds of calamities are excluded from coverage? Always look for the most comprehensive policy you can find. 
• Length of the extended warranty: Does the card issuer extend your original manufacturer's warranty by one year or two? A longer extended warranty is obviously preferred as you'll be protected from losses for twice the length of time. 
• Claim limit: What's the cap on the value of covered items? Does the card have an annual or lifetime limit on the value of warranty claims? Most cards have both a per-claim and an aggregate limit. If you're buying an expensive item or are not always lucky when it comes to things breaking, you'll want a card with a higher coverage limit.

Keep in mind that card issuers can change their policies, so if an extended warranty is important to you, always check for the most updated details. If your card issuer updates its terms and conditions, you may also want to read through the notification of the changes carefully. That way you can make sure nothing is being altered related to your warranty coverage. 

How do you make a claim on your credit card's extended warranty?

You'll need to call your card issuer or check your policy terms to find out how to make a claim if something goes wrong with a covered item. Often, there are claim forms available online that you can fill out.

In most cases, you'll need to provide some basic documentation to your creditor, including:

• Your original store receipt and a copy of your credit card statement to provide proof of the purchase. 
• A copy of the manufacturer's warranty, which must have expired before your credit card's extended warranty kicks in.
• Details about the problem with the item. This can include a receipt from a diagnostic service call as well as an estimate for the cost of repairs. 

You typically have a limited time to make your claim, so be sure to read your cardholder agreement and file a claim promptly as soon as something breaks that should be covered. 

Make sure you take advantage of extended warranties on your credit card

When buying a valuable item, there's no reason not to use a credit card offering an extended warranty if you have one. This free cardholder benefit could possibly save you a lot of money if your item breaks after the manufacturer's warranty has expired but while your extended warranty is still in effect.