Some purchases you're better off without can sometimes seem like smart buys — until you look at the fine prin. To help you understand the difference, here are five popular purchases that might seem like good buys, but are usually just a waste of your hard-earned money.
Cell phone insurance
A new iPhone costs more than $600, and the next ones are expected to cost even more. Even if you don't splurge on the latest and greatest phone, they're still pricey: The average price for a new smartphone is expected to reach $567 in 2017.
It's tempting to sign up for insurance, which usually costs from $5 to $11 monthly, according to CNET. That may not sound like a lot, but it adds up over time. Worse, the coverage you're buying may not be comprehensive.
"For each claim you file, you'll pay a deductible of $50 to $199 (unless it's an old-school flip phone, assume that price is going to be $199), and most insurance companies only let you file up to two claims per year," CNET wrote.
Do the math. Without insurance, you'll pay roughly $129 to $149 to fix a broken iPhone screen. That's less than the deductible on most phone policies — so unless your phone gets run over by a truck or you wind up losing it long before you plan to upgrade, you're better off passing on insurance.
Tax software and services
Don't pay for tax software or prep unless you absolutely have to. A handful of free programs (from TurboTax, Tax Act and even the IRS) are available for anyone with an adjusted gross income of $64,000 or less. And Credit Karma now offers free tax software regardless of income.
Most people can whiz through their taxes in a couple hours or less once they have all the paperwork together. It may seem hard, but it's not really. If you need help, look for free local services. For example, New York City Consumer Affairs lists more than 200 sites offering free help.
Beware of upsells on some "free" software. "Taxpayers with investments, for example, can pay more than $90 for a federal and state return from TurboTax's and H&R Block's online services," according to Bloomberg.
If you make too much to qualify for free software or don't want to gamble on a first-year product from Credit Karma, you can still do your taxes for free using the IRS' online forms, but it's a tough slog. As the IRS states, you must "know how to do your taxes yourself" and must file your state returns separately.
In that case, it may be worth the $100 or so (including tax) for paid programs. Chances are, it will still be cheaper than paying a professional tax preparer.
Apps and software
With so many devices, there's an endless array of apps to choose from, ranging from antivirus software for your computer to smartphone games.
"Mobile consumers spent an average of $35 on apps [in 2015] — both premium downloads and in-app purchases," according to Sensor Tower. Spending for computer programs can be much higher, with the premium version of Norton Security coming in at $59.99 for the first year.
Most of these purchases aren't necessary. Switch to OpenOffice, for example, and save the $69.99 you'd pay per year for Office 365 Personal. PC Magazine offers a handy list of the best free anti-virus solutions, and there are seemingly endless lists of truly free apps.
Rental car insurance
When you rent a car, the customer service rep will ask if you want to buy insurance. You probably should say no.
There are actually four kinds of rental car insurance reps may try to sell to you: a collision or loss damage waiver to cover theft or damage; liability protection for lawsuits in case you cause a collision; personal accident insurance to cover costs if you get into a crash; and personal effects coverage to pay for theft or loss of items you keep in the car.
Purchasing all four policies will run you anywhere from $18 to $42 daily, according to Esurance. For a weekend rental, you could spend close to $100 on insurance alone.
If you own a vehicle, chances are your insurance policy will cover your rental as well. If you don't already have car insurance, check with your credit card providers, many of which cover collision or loss insurance for short-term rentals. What the cards don't offer, however, is liability coverage. So if you're worried about getting sued, you might consider shelling out for that.
Extended warranties for big-ticket items
Extended warranties are available on everything from cars to couches. Median prices for extended car warranties are just over $1,200, while Macy's charges $169 for "premium protection" of a $600 piece of furniture.
"You can go broke buying extended warranties to cover everything in your life," according to Consumer Reports. These warranties don't always provide the promised coverage, not to mention they often duplicate existing warranties and cost more than repairs themselves.
Instead of buying a warranty, save the money to cover the cost if something does go wrong. If your product breaks outside the standard warranty, contact the manufacturer. Many offer discounts on repairs or replacement, even outside the warranty period.
The bottom line: Do your research to make sure the money you're spending is worth what you're getting.
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