Be wary of buy-back programs

---by Kim Komando    7/2/2011

Technology is constantly changing. There's always a newer, faster, shinier gadget on the horizon. That takes some of the joy out of buying a new computer, HDTV or smartphone. So, stores like Best Buy are launching buy-back programs.

It sounds like a great idea. You buy an eligible item like a camcorder, camera or HDTV. When it's time to upgrade, the store buys it back for a set price. Unfortunately, these programs aren't so great when you learn the details. Let's look at how this all works.

Best Buy

Best Buy's Buy Back Program is available on a wide range of products. You'll have to pay for it, though. At the low end, it costs $8 for Blu-ray or DVD players priced under $150. At the high end, it costs $180 for televisions priced between $2,500 and $5,000. If you're buying a computer or tablet, you'll pay $50 for the program.

Best Buy will buy back your item starting 31 days after purchase. This is considered the effective date. Unfortunately, it will only pay you a fraction of what you spent. It varies depending on the time since the effective date. And you will get a gift card, not actual cash.

If you take an item in on the 31st day, you'll get up to 50 percent of the original price. That's certainly not as much as you'd hoped. And remember that few items depreciate 50 percent within the first year.

After six months, the buy-back amount falls to 40 percent. Twelve months from the effective date, it will be 30 percent; at 18 months, it's 20 percent. The Buy Back Program ends at 24 months for all items except TVs. TVs are covered to 48 months at 20 percent.

These percentages are the maximum you'll receive. You'll need to keep all the original parts. Also, the item has to be in good condition, with only normal wear and tear. If the item is in poor condition, these values are cut in half. What constitutes poor condition? If there are dents, scratches, dirt or "other signs of use." If an item is substantially damaged, you get nothing.

Let's look at a real-world example. Say you purchase a 64GB iPad 2 with 3G for $829. You take it in after 11 months. The maximum you'll receive is $332. Subtract the $50 you spent for the program. That leaves $280. This may not sound shabby. But an original iPad with the same specs sells for upwards of $400 on eBay. Clearly, you'd be better to sell your iPad yourself.

Now, there are a couple of peculiarities. Best Buy uses the MSRP when calculating the buy-back price for cellphones, not the subsidized price. Also, Best Buy has a trade-in program for some items. It will give you the Buy Back price or 10 percent above trade-in value, whichever is greater.

TechForward

TechForward offers its Guaranteed Buyback plan. You can purchase the plan from participating retailers like Dell and Wal-Mart. Or, buy the plan directly from TechForward's site within 30 days of purchasing an eligible item.

TechForward's plan works essentially the same way as Best Buy's. However, the program expires after 24 months for all items. There are also slight differences in pricing. That iPad I mentioned above? TechForward will pay you $10 more than Best Buy will. It's not significant, but it's something.

Ultimately, I can't recommend these buy-back programs. In most cases, you're better off selling your old gear on eBay or Craigslist. (Click here for help maximizing your profits.) Also, these programs encourage you to upgrade your gear sooner than is really necessary. And that might be the costliest part of these programs.