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You hear and read a lot about maintenance agreements and extended warranties, so much so that you probably get confused as to which is which and should you bother with any of them.

Let's see if I can help clear it up.

An extended warranty is something you pay for in case your product goes bad. You can then get a little relief with repairs and perhaps a small percentage off the price of a new unit.

Often, extended warranties are costly and are something to avoid. They can sometimes cover the same time period as your products warranty, which makes them a waste of money.

A lot of the time if you would just bank the money the seller wants for an extended warranty, you will have plenty of money for repairs and/or replacement models.

You will hear consumer gurus telling you that extended warranties are bad.

I concur.

A maintenance agreement on the other hand, is something that you renew every year and comes with a tangible benefit. You mostly hear of maintenance agreements in the field of heating and air, plumbing and electrical work for your home.

For an example, let's look at a heating and air maintenance agreement.

In this agreement you pay a set amount each year. (In the Atlanta market if you are spending more than $158 per system per year then you are spending too much. Also, look for discounts on the second and third system if you have them.)

The company you purchase the agreement from will then come to your house twice a year, once in the spring to tune-up your air conditioner, and once in the fall to tune-up your furnace. Or vice-versa depending on when you purchase your agreement.

The agreement is for 12 months and in addition to the two tune-up calls you will often also get a discount on parts and service should you need them, and you will generally be on a preferred customer list in case of emergencies, which is nice.

The agreement must be renewed every year (unless you buy a multi-year agreement) and, here's a tip: if I were purchasing a new hvac system I wouldn't sign on the dotted line until I had at least 2 years of free maintenance included in the deal, and even then I would ask for 3.

Plumbing deals and electrical deals all work in the same fashion.

Value for your money. It's always a great trade-off.

Some extended warranties can be dressed up to look like maintenance agreements, just like some hvac lease offers can be drawn up to look like new purchases so beware.

One last note - if your hvac system is over 10 years old and you do not have a maintenance agreement you are pushing the envelope for.

Often years can be added to the life of a system with proper care and maintenance, and now would be the time to jump on board.