Sales clerks in retailers like The Brick, Visions Electronics and Sears are offering what sounds like a sweet deal: pay for an extended warranty on a purchase, and if you don’t make a claim, you’ll get back the amount you paid for the warranty when it expires. But unfortunately, it’s not that simple.
You’ll have to be attentive because often you have only 90 days after the warranty expires to claim and spend your refund. You don’t get cash, but you will get a credit, excluding taxes. Some retailers, like Sears, let you use the credit only on a new purchase that is twice the value of the credit, so you’ll need to spend $200 to use a $100 credit. Other restrictions may apply on which type of products you’re allowed to buy. In most cases, you’re still better off turning down the sales pitch for the extended warranty, a service that is hugely profitable for retailers.