Which credit cards or bank accounts offer extended warranties?
I'VE HEARD that some credit cards and bank accounts offer an extended warranty on electrical appliances - is that true?
Yes, that's right. Some cards - credit and debit - offer extended warranties on electrical goods as long as they're used to purchase those specific items.
It's a great bonus, although a rapidly disappearing one, and the policies always include exclusions - for example the kind of electricals that are covered, and how many products can be covered each year.
Let's take a closer look.
Credit cards that cover electrical goods
Unfortunately, new credit cards that offer an extended warranty are practically extinct - but people with a couple of different cards now unavailable to new customers can also benefit.
In fact, after searching high and low, we've managed to track down just one credit card that still offers extended warranties:
- The HSBC Premier credit card (cost of credit): Gives holders up to two years extended warranty on some electrical items; up to three appliances can be registered each year.
Additionally, anyone who has one of these discontinued cards may be in luck:
- The Nationwide Classic, Gold and Cash Reward credit cards (more details) : Offer a free year's extra warranty on top of any 1-2 year manufacturer's warranty for most gas and electrical goods - but notably excluding computers and accessories, and mobile phones. Covers goods that cost between £50 and £5,000.
- The Capital One Aspire Elite credit card (more details) : Offers a two year extended warranty on a range of electrical goods that come with at least a two year manufacturer's warranty. Covers goods between £50 and £2000, up to £20,000 cover per year. Keep hold of the original receipt (for the sale and the credit card transaction if separate), credit card statement and original manufacturer's warranty.
- The RBS and Natwest Black cards (RBS, Natwest) : Adds an extra year's cover for up to six items priced between £75 and £2,000 that come with a one or two year manufacturer's warranty.
- The Ulster Bank Gold Mastercard (cost of credit): Until September 2014, offered a free extra year's warranty including breakdown due to accidental damage. You could register up to 6 appliances per year.
Note that some of the cards above charge annual fees, and while they come with other benefits as well, this is a charge worth bearing in mind.
Additionally, credit cards charge interest when purchases aren't repaid in full each statement period, so weigh up the cost of the credit by reviewing the representative examples (available from the providers).
Keep in mind these additional costs could outweigh the savings. For example, buying an extended warranty separately can cost as low as £13 per month for cover for three items.
Current accounts with free warranties
For a while extended warranties were one of the more common benefits for packaged current account holders, although they've fallen out of favour compared to discount options and mobile phone insurance.
We're slightly ambivalent about getting extra cover this way. As we've argued here it's hard to make the fees packaged accounts charge worthwhile: these aren't free extras as warranties with some credit cards certainly can be.
If you can make it worthwhile, though, the following accounts might be of interest.
- Barclays Bank Basic current account (more details) : a 12 month extended warranty is available with the Home Pack (£6/month), items must be registered but there is no limit to the number of items you can register.
- Nationwide FlexPlus current account (more details) : a 12 month extended warranty is available with no limit on the number of appliances but a claim limit of £2,000 for each claim made and a £10,000 limit on all claims in a 12 month period. There's a £10 monthly charge for holding the account.
Additionally, anyone who has one of these accounts may be in luck:
- Existing holders of the Natwest Advantage Gold current account (more details) : this account, which is not accepting new customers, used to offer a 12 month extended warranty - so appliances registered before 31 October 2014 may be covered.
- Existing holders of the RBS Royalties Gold current account (more details) : this account, which is not accepting new customers, used to offer a 12 month extended warranty - so appliances registered before 31 October 2014 may be covered.
How extended warranties work
Most electrical goods come with a free year-long warranty. That says, basically: "if your product breaks in the next 12 months, the manufacturer will take a look at it".
An extended warranty will continue to protect the product once the 12 months are up sometimes for up to as long as three years. Often the extension will provide the same level of cover as the original warranty, but sometimes it'll be restricted in some way.
For a much longer period, then, the working order of a product is the retailer or the manufacturer's responsibility - you won't have to buy a new washing machine or TV if it suddenly breaks while it's still fairly new.
In some cases a warranty will also include accidental damage and theft - so, in that sense, it's better than a basic guarantee but similar to any standard insurance policy.
Wherever the warranty comes from, it's best to check paperwork carefully before assuming that goods are covered and certainly before applying for any product just because it offers extra protection on certain goods.
The big drawback with extended warranties is that they can be very costly.
Sometimes, particularly as appliances get cheaper, an extended warranty can considerably increase the total purchase price of the product.
Shop assistants often try to sell expensive extended warranties to protect new electricals for a few extra years because they get commission from the sale.
Alternative ways to get extra cover without extra costs, such as the right credit card, are a major plus, then.
However, cardholders should check whether they need to purchase a warranty in the first place, in order to trigger the free extension.
In that case they should think carefully about whether they need to pay out at all - especially as, in some cases, warranties aren't even necessary.
As hinted at above, particularly in the case of accidental damage and theft, goods may already be covered under the owner's home contents insurance.
Using free extended warranties
Finally, assuming they've tracked down a credit card with a worthwhile extended warranty, cardholders need to use the policy correctly in order for electricals to be covered.
The rules depend on the individual provider's policy, so check the terms and conditions before relying on any cover. However, here are a few things worth looking out for in those conditions.
Firstly, check out the exclusions section of the credit card's extended warranty conditions to make sure that the item is included: items such as mobile phones and computers are commonly excluded.
Second, cardholders almost always need to buy the item in full on the credit card to be covered by the warranty.
Thirdly, register the product within a certain time frame: most of the cards we found ask customers to register their product within 60 days of purchase.
Just as with many other insurance policies, there's often a limit to the number or value of products that can be registered and/or a cap on the value of claims that can be made each year.
Finally, cardholders should make sure that they reduce excess costs by clearing the credit card balance in full by the due date.
Anyone who ends up having to pay interest on a purchase is effectively paying for what should have been free cover.