As a quick followup, I just wanted to point out a potential gotcha with gift cards as they relate to the free extended warranties provided by many credit card issuers…
You’re likely aware that a common perk offered by credit card issuers is to automatically extend the warranties on your purchases. But did you know that, to qualify, your entire purchase has to be paid for with the card in question?
So… If you time-shift your Amazon spending into the bonus window by buying gift cards, as I have done, you run the risk of inadvertently nullifying the extended warranty that you might otherwise get on a future purchase.
The risk of partial payment
Let’s say, for example, that you bought a $75 gift card (as I did) and stashed it in your account for future use. When you go back later to buy that fancy new 90-inch LED TV (or whatever), you’ll have to be careful.
The way the Amazon checkout system is set up, it applies your gift card balance to your purchases by default. This seems nice, as it’s easy enough to forget about gift cards. But it also means that your purchase won’t qualify for the extended warranty, even if the gift card accounted for just a tiny fraction of the total price.
To prevent this from happening, you’ll need to click the “Change” link under payment method (at checkout) and then uncheck the box for using your gift card or promotional discount balance. Or you’ll need to wait until you’re ready to use your gift cards (at risk of losing them) before loading them into your account.
This may seem like a minor point, but it’s all too easy inadvertently pay for a small portion of a major purchase with a gift card or other promotional credit and void the warranty extension that you would otherwise get from your credit card issuer.
Split your purchases for protection
While I’ve highlighted the example of bonus-chasing at Amazon above, the same problem exists for any purchase, online or otherwise. Is it really worth using that $25 gift card from Aunt Hilda toward a high-dollar purchase when doing so will cost you a free extended warranty? Maybe. But maybe not…
At the very least, if you’re buying multiple items, you should separate out that you might want covered by an extended warranty and use a credit card for those items on their own. You can then pay for the balance of your stuff with a mix of whatever payment methods you prefer — gift cards, credit, cash, or whatever.
In this scenario, perishables, consumables, and any other low-dollar items are good candidates for the catch-all transaction that won’t qualify for extended coverage.