Are extended warranties worth it? In today’s episode of Scambook TV, Kevan presents 4 reasons why consumers should just say no to extended warranties. Although it sounds like a smart investment when you’re buying an appliance or high-end electronics like a flat screen TV, most extended warranties are a waste of money.
CNET reviewers found that the cost of repairs are often cheaper or the same price as the warranty. Kevan also points out that extended warranties may not offer the damage protection you need or cover normal wear and tear. Additionally, most credit cards automatically extend the original manufacturer’s warranty by one year. But the biggest reason why you shouldn’t buy an extended warranty? Most products just don’t break!
We all know the pitch. You’re buying a new laptop, flat screen TV or even a toaster oven, and the salesperson suddenly launches into the virtues of buying an extended warranty. For an additional fee, you’ll get protection for your product beyond the original 90 day or 1 year manufacturer’s warranty. It’s a sound investment, isn’t it?
Not always. CNET and Consumer Reports reviewed several extended warranty plans and found that consumers who purchase an extended warranty seldom use them. Or, if they do use them, there are hidden costs (like fees to ship the product to the factory and back) which quickly add up and ruin the warranty’s value.
4 Reasons Why You Don’t Need an Extended Warranty
1. Repairs might be cheaper. CNET reviewed extended warranty plans for many consumer electronics, such as televisions and computers, and found that the cost of a one-time repair is often cheaper or the same price as the extended warranty.
The cost of an extended warranty may be marked up to cover the salesperson’s commissions or boost the store’s profit margin. As a result, it might make more sense to skip the extended warranty purchase and just save your money. You may never need to spend it if your product doesn’t break.
2. The extended warranty might not cover everything. Sometimes, extended warranty plans only cover manufacturing defects, not the natural wear and tear that happens from using the product. Your repairs or replacements might not be covered if the damage was caused by something other than a defect. Additionally, many extended warranties don’t cover accidents like drops or spills. Don’t be mislead by the sales pitch. If you’re buying an item that’s prone to accidental damage, such as a laptop or a cell phone, make sure you read the fine print very carefully before you consider buying a warranty.
3. Credit cards give you extra protection for free. If you’re paying with plastic, most credit cards automatically extend a product’s manufacturer warranty by one year. Depending on the terms and duration of the extended warranty offered by the store, you might not need it if you’re charging the purchase. It’s another one of the many consumer protections offered by credit card companies. Check your card holder policy or go online to your credit card company’s website for more details.
4. Most products don’t break. Statistically speaking, most products don’t need repairs. WSFA 12 News gathered some statistics from Consumer Reports to compile a list of the top consumer products most likely to need repair within the first three years:
As you can see, desktop and laptop PCs top the list – even then, the repair rate is under 40%!
Should You Ever Buy an Extended Warranty?
Of course, there are exceptions to every rule and there may be circumstances where an extended warranty will pay off. If you’re accident-prone and tend to worry, the price of an extended warranty — even if you never use it — may be worth the peace of mind. It might also be a good idea to have extra protection for something you can’t live without, such as a refrigerator.
Or, if you’ve been researching a product and all the consumer reviews suggest buying a warranty, you might want to consider it, too. Just make sure to read the fine print so you understand what kind of damage is covered by the extended warranty.