Shop closeout sales--carefully

NEW YORK (12/3/08)--As more retailers feel the effects of the economic slowdown, be on the lookout for steep discounts. Many financially strapped retailers are hoping to lure enough spending this month to stay in business in 2009 (smartmoney.com Nov. 17).

Several major retailers--such as Circuit City, Linens 'N Things, Tweeter, Sharper Image, Footlocker, Ann Taylor, and Comp USA--already are calling it quits or closing some of their doors.

Low prices on liquidation sales can be sweet deals for bargain hunters, especially if you shop early before the shelves start to look bare. But those sweet deals can turn sour if shoppers aren't careful.

Here are tips to protect your purchases from retailers in trouble:

Give final sales special consideration. When you see the "all sales are final" sign, inspect the item for dings, damage, or missing pieces. Take it out of the box, turn it over, try it on. Determine if the item is worth the risk. A rug isn't likely to break, but the speakers on a flat-screen TV could fail, leaving you with an expensive, worthless object. Remember that the item probably cannot be returned. That said, final sales can be great bargains for the savvy shopper.

Ask for the return policy. Some retailers allow a short period of time for returns so long as you have the receipt. If so, give all the product features a trial run. You may not need the French language option on a VCR very often, but if it's necessary for that one special film, make sure it says "Oui."

Look for the warranty. If you're buying appliances or items with electronics, be sure it comes with a warranty from the manufacturer (read it, don't just find it). If the store offers an extended warranty, ask who covers it. If it is an unrelated, third-party company, the store's financial situation shouldn't be cause for worry. Take the time to research whether or not you need an extended warranty. If common potential repairs cost less than the cost of the warranty, you may choose to save the money and self-insure with a savings account.

Shop with a credit card. Your credit card may give your purchase extra protection. If goods are defective or if you don't receive the product, you can dispute the charge. Check with your credit card provider for details before making a final sale purchase, especially if it's a high-ticket item. Some credit card companies provide additional extended warranties for some card holders. If so, you don't need to purchase an extended warranty from the retailer.

Use gift cards soon. According to the National Retail Federation, more than $26.3 billion was spent by last season's givers. If you still have a gift card in your wallet from a retailer in trouble, use it soon. Gift card holders are considered "unsecured creditors" in bankruptcy court. That means everyone else gets paid before you do, and the likelihood of using the card is limited.

For more information, read "What Happens to Unused Gift Card Cash?" in Home & Family Finance Resource Center.

courtesy of cuna.org