There are plenty of reasons to keep your wallet in your pocket when asked about an extended warranty, but they can be worth it if the item costs more than $1,000.
If you go out to buy the latest electronic gadget, whether it’s a Smartphone or a high-definition TV, or an appliance, like a washer or a dryer, the salesperson will surely try to talk you into buying an extended warranty on the item. The extended warranty is designed to kick in when the manufacturer’s warranty runs out. There’s good reason for the retailer to be pushy - the payment on that warranty is pure profit and, in fact, will dwarf whatever profit the retailer makes on the item itself. But is the protection worth that much to you?
There are plenty of reasons to keep your wallet in your pocket when asked about an extended warranty. First off, the odds are slim that the item will die within the period between the expiration dates of the manufacturer’s warranty and the extended warranty. Even if that happens, the death has to be due to a covered cause - mechanical failure, for example, rather than accidental damage. And if an electronic appliance lasts more than three or four years, chances are you can by a new and better one for less than the cost of repairs.
An extended warranty can be a good buy, say consumer advocates, if the item costs more than $1,000. In that case, buying the warranty may be preferable to shelling out for a new one or for an out-of-warranty repair. If the item represents cutting-edge technology, a warranty may be a good idea since newly minted technology tends to be prone to problems. Lastly, check out consumer reviews to see if your new gadget has a history of problems. If so, a warranty might be in order.