Buyer, be aware

There’s surely nothing cheery about the liquidation of Sears Canada after 65 years in business and the thousands of jobs axed across the country.

But one positive piece of fallout from the death of the retail giant is the talk that’s been generated about extended warranties and whether they’re worth the paper they’re written on.

Since Sears Canada announced it was going out of business, stories have started coming to light about people who had made major purchases from the store — kitchen appliances, furniture and the like — and purchased extended warranties, only to find out they will no longer be honoured and they are ineligible for a refund.

Only those who bought so called “protection agreements” from Sears within the last 30 days will get their money back.

It’s understandable that people want extended warranties. Who hasn’t made a major purchase at some point that turned out to be a lemon?

But the advocacy group Consumer Reports says people are better off setting money aside for repairs that they would otherwise spend on extended warranties, since often they don’t offer as much protection as you might think.

“Extended warranties can have many gotchas, relying on contract fine print to deny coverage for almost any reason,” Consumer Reports warns. “They’ve become a major source of complaints to the Better Business Bureau and elsewhere. …

“Extended warranties also can exclude a variety of parts. For example, among the refrigerator parts that aren’t covered under one home service contract we recently reviewed are icemakers, beverage dispensers, door seals and gaskets, hinges, lighting and handles. An auto service contract we examined excludes brake drums and rotors, air bags, door handles, lock cylinders, the exhaust system, body panels, among other parts.”

Those are pretty key parts. Viewed through a cynical lens, you might suspect some companies bank on their customers not having the time to wade through all that fine print.

Of course, not all extended warranties are bad, but consumers should take the time to read them through before they pay for anything.

And you might already have all the protection you need.

Many credit cards offer extended warranty protection that adds between one and three years of extra coverage to the manufacturer’s warranty.

The blog greedyrates.ca offers a comparison of Canadian credit cards with the best extended warranties here: http://www.greedyrates.ca/blog/extendedwarranties/

Again, you need to read the fine print; some credit cards offer protection in Canada only, so if you’ve made your purchase elsewhere, your card might not cover it. Your card also might not cover some items at all — such as a motor vehicle, or it may not pay for computer parts and repairs if the model you bought was refurbished.

With a little research and the right card, though, you could save yourself hundreds of dollars.

The devil, as they say, is in the details.