Skip the Extended Warranty and Save Money Instead
If you are buying a product from a reputable company, feel free to skip the seller’s “extended warranty” – you are likely already covered by the manufacturer’s warranty, and possible repairs may cost less than you think.
Don’t pay for unnecessary coverage
According to Consumer Reports , retailers deduct 50 percent or more of what they charge on these contracts, which is a very high margin – far more than they can make selling the products themselves.
“Extended warranties are generally a bad deal,” says Jack Gillies , executive director of the Consumer Federation of America. “Firstly, they are not guarantees, and no one gets such legal protection as a guarantee. These are service contracts, or rather, overpriced insurance plans. “
On the other hand, if you really want extra protection that’s fine too – just make sure it’s a good deal that actually provides extra coverage beyond what you already have.
The manufacturer’s warranty already covers the replacement
Many products purchased already include a manufacturer’s warranty that will repair or replace your product if it is defective. The problem with extended seller warranty is that it often duplicates the same coverage over the same period of time. To make matters worse, extended warranties sometimes work only after you have first tried to find relief through the manufacturer’s warranty. Read the fine print and make sure the extended warranty really dwarfs the coverage you’ve already paid for (companies like Apple have generous two-year warranties, while others may only offer 30 or 90 days).
Plus, if your product fails or doesn’t work, it doesn’t hurt to ask for a replacement, even if you don’t have any kind of warranty. If there is a receipt, many companies will replace the product if the product fails in an unreasonably short time.
Coating may not be required for cheaper products
Repairing inexpensive items like cheap home appliances probably won’t cost much more than a data plan. According to HomeAdvisor, the average home appliance repair cost is $ 171 , which won’t be worth it if the extended warranty costs you more, as is often the case with multi-year plans.
Your credit card can cover you
Pay by credit card whenever possible, as many cards automatically extend the manufacturer’s warranty to one year. In this case, the extended warranty is provided free of charge.
Buy goods from trusted companies
If you buy a product from a reputable company, you usually buy something that will last longer than a cheaper counterfeit. Plus, these brands tend to have more generous manufacturer warranties. Look online for product reviews – if it breaks down badly, you’ll definitely read something about it. The FTC has provided more information on extended warranties here . This post was originally published in 2016 and was updated on January 7, 2021 to include new information.