Funancials

The Funny Money Blog

I was in a Facebook Fist Fight Involving Credit Cards, Cell Phone Insurance and Extended Warranties

Personal Finance ·

I don’t get mad often; but the other day I found myself furious. I wasn’t cut off in traffic. No one gave me the middle finger. I actually wasn’t physically harmed in any way, but the abuse I received was unbearable.

I logged into Facebook the other day and scrolled through my friend’s thoughts, plans, and baby pictures. I stopped scrolling when I came across a status with several comments.

“Okay smartphone users, $7/month insurance or not?”

  • “Yes”
  • “Yes, get it”
  • “Y.E.S.”
  • “DO IT!”
  • “YES! Of course  you need it.”
  • “yes yes yes”
  • “YES YES YES”
  • “I flushed mine down the toilet. Definite YES!”
In total, there were 19 people who – in some way, shape, or form – said yes. I was devastated.
Each comment felt like a dagger penetrating my economic soul.
I was the only one to take the opposing position. It was 19 vs. 1 at that point. Needless to say, I liked my odds..
  • Me: “No don’t get it. Instead pay your phone bill with your credit card. Visa and mastercard provide the same insurance as the service provider. Keep your $7 /month.”
  • Other: “Most credit card companies only do that for 90 days after the initial purchase..and it doesn’t cover accidental damages either..not a good idea”
  • Me: “You’re referring to returns. If you use a credit card for a purchase the card company will replace or repair your item within 90 days of purchase. Credit card companies are now also offering Cell Phone Replacement Insurance. If you use your card to make your monthly payment (doesn’t matter if you made your initial purchase with it) and your phone is damaged or stolen (can’t be lost) then your card company will pay for it.”
I suppose the dialogue could have stopped here; but I couldn’t hold my tongue. I had to say something.
  • Me: “And you guys wonder why you’re poor?”

Oh snap! I probably could have kept that one to myself [foot in mouth]. It wasn’t even about the $7. Saving $7/month isn’t going to change anyone’s life, but recognizing irrational behavior and improving decisions can.

Even if your best credit card doesn’t provide you cell phone protection or extended warranties, you still shouldn’t get it. Even if you’re a constant toilet-talker, you don’t need it. I am a man of odds; and just like buying lottery tickets – the odds are against  you.

Don’t Believe Me?

Industry sources estimate the profit margin on consumer electronic extended warranties between 50-80%. Could you imagine if banks saw this kind of margin? The reason the margin is so high is because there aren’t that many claims! People think there is a 50% chance of them damaging their phone when, in all actuality, it’s closer to 5%.

Do you buy extended warranties and unnecessary insurance?

A Blinkin

Hunter, aka A. Blinkin, is the blogger behind Funancials. His experience in banking, lending, payments and investments has earned him the title of "Personal Finance Guru." In addition to helping people with their finances, Hunter enjoys crunchy tacos, open mouth kisses from his 2 baby boys and writing in third person.

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