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5 worst tech rip-offs and how to avoid them

5 worst tech rip-offs and how to avoid them
© Antonio Guillem | Dreamstime.com

Everyone likes to save money, which is why we give you several money-saving suggestions every week, from booking directly with hotels to ways that you can stop wasting printer ink. Today we're bringing you not one, not two, but five areas to save money.

These are things you might not even realize you're spending money on, or that someone convinced you are a good idea when they really aren't. So, strap in and let's start saving.

1. Rental cable modems

We talk a lot about saving on your cable bill because it's one of the bigger ones you probably have. However, even when you've cut it down as low as you can go, there's a charge on your bill that you might not have noticed: modem rental.

Yep, your cable company is charging you $3 to $4 every month for that years-old modem collecting dust on your desk. On the plus side, if something goes wrong with that modem, the cable company will replace it.

On the other hand, you can buy a new cable modem with the latest technology for $85 to $100 that will give you more than four years of service. Leasing a modem from the cable company for four years at $4 per month will cost you $192. I guarantee you, your cable company pays nowhere near that much for the modems it provides, so much of that fee is pure profit.

Even if you don't want to mess with buying your own modem, call up your cable company's customer service. You can usually get the monthly modem fee waived, or have them upgrade you to a new model with faster technology. Learn why you want a new modem and how it can improve your Internet speeds and connection quality.

2. Overpriced cables

You just bought a perfect new TV that has the five important features any new TV should have. Before you can take it home, however, you need cables to hook it up to your Blu-ray player, audio receiver and other home theater equipment.

Bonus tip: Speaking of cables, don't let them turn into a rat's nest. Here are some clever ideas to organize the cable tangle behind your computer and entertainment center.

That's when you notice that cable prices cover a huge range from "dirt cheap" to "this month's mortgage payment." You want to buy the cheap one, but surely the cables priced into the stratosphere have SOMETHING that makes them better.

If you talk to an unscrupulous salesperson, they'll do their best to convince you that the premium cables give you better image or audio thanks to contacts coated with gold stolen piece by piece from a dragon's den in the Himalayas, or silver conductors forged by elves in the light of a full moon.

In the end, it's just sales hype. Any cable that's shielded (and most are now) and has basic gold connectors is fine for most situations. If you're dealing with distances over 15 feet or an entertainment setup that costs more than the average American home, then you can look at pricier cables.

Fortunately, as more people are catching on to this rip-off, overpriced cables are becoming scarcer in regular retail stores.

3. Phone insurance

When you bought your phone, the salesperson probably offered phone insurance. The idea is that you pay $5 to $13 a month, and if something happens to your phone, you can get it fixed or replaced without spending the full cost.

At first, that sounds just like the phone's warranty, but insurance protects against theft and other damage that a warranty usually doesn't cover. At least that's the theory.

In practice, you can find several insurance tiers that offer varying levels of protection, even from the same carrier. Only the most expensive tiers are going to cover your phone if it's damaged, lost or stolen. Less expensive tiers only deal with damage and malfunctions. Some third-party insurance doesn't cover theft or loss at all.

Then there's the deductible, which again varies by the plan and gadget, but it can get up to $200. Most damage you need repaired is going to be less than that, especially if you do it yourself. The only time it makes sense is if you have to completely replace a $500+ smartphone out of pocket. Even then, the insurance company might replace it with a refurbished model.

Unless you know you're really unlucky with your phones, you're better off saving your money. Many credit cards offer extra protection for gadgets bought with the card, and your electronics might also be covered under your renter's insurance. I'd look into your options there before spending money on phone insurance. I'll discuss this more in point 5.

4. Ringback tones

This isn't a term a lot of people know, but I'm sure you've experienced it. A ringback tone is music that plays for a caller before you answer the phone. It's nicer than the typical "ringing" sound you get by default.

Depending on the phone and carrier, you can even customize the ringback tone for certain callers. So your mom might hear a clip from Vivaldi's "The Four Seasons" while your rock-loving friend hears The Rolling Stones' "Gimme Shelter."

The catch is that ringback tones are going to cost you. With Verizon, for example, you pay $0.99 a month for each phone that you want to play ringback tones. Then you have to pay $1.99 for each individual ringback tone, which you can only use on one phone at a time. Even then, you only get to use the song for one year before you have to pay for it again.

In other words, ringback tones are a great way to increase your phone bill, especially if you have teenagers in the house who go overboard with it. Save your money and let your friends listen to the default ringer sound.

5. Extended warranties

We've already talked about salespeople trying to sell you on phone insurance, but another popular upsell on any gadget is the extended warranty. This plays on the joke that a gadget always breaks the day after the warranty expires.

However, data from consumer reports shows that most manufacturing problems with a gadget will show up in the first year. If your gadget makes it through that, it often won't hit wear and tear failures until after the extended warranty expires.

Even if you have a problem during the extended warranty period, most extended warranties aren't as comprehensive as you would hope. It might not cover common types of damage or wear and tear.

Don't forget that prices on electronics drop fast. So, by the time a gadget does fail, the cost to repair or even replace it might be less than what you paid for the extended warranty itself.

You should also check with your credit card company. It might give you an extended warranty or extra benefits automatically when you buy with certain cards. Some cards will extend the manufacturer's warranty another full year.

There are times, however, when buying an extended warranty might make sense. Learn what those times are, how to save with third-party warranties and some essential rules you should keep in mind.

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