By: Julia Bellotti
You’re buying a fancy new TV at Best Buy and the associate asks if you want to add the extended warranty. What do you say? If you’re honest with yourself, you probably have no idea whether or not it’s a good idea.
The general consensus? It's not.
The purpose of an extended warranty is to protect your purchase even after the standard warranty ends. This can be offered by the manufacturer of your purchased item, the retailer, or a third party. While this sounds like a great idea, more often than not, it's not worth it – and here's why:
Products That Break Do So Within Warranty
If a product is going to break because it was poorly manufactured, it's likely to break within the first 6 months to a year. The standard warranty would cover you in that case.
Those That Don't Break Within Standard Warranty Usually Aren't Covered
Warranties generally don't cover the cost of replacing the item due to an accident, which is the likely cause of you needing it replaced after that first year. This is why it's important for you to read the fine print of an extended warranty. If you're buying a new phone, you might think the extended warranty will replace your phone if you accidentally drop it and the screen breaks. That rarely happens. Consumer Reports states that "only 15 percent of products in our survey were covered by the manufacturer’s regular warranty when they broke, and about 10 percent were under a service contract or extended warranty." Even then, there's no guarantee you'll get a completely new item. You may have to have it repaired, leaving you without that device for a week or two.
If You Bought the Item With a Certain Credit Card, You May Automatically Have an Extended Warranty
Many US credit cards offer extended warranty as a benefit. For example, Visa Signature cards automatically extend the standard warranty one whole year (with exception to vehicles). Therefore, even though you may not need it, you're already getting an extended warranty by simply purchasing the item with that credit card. American Express, Discover, and MasterCard also offer extended warranties – read your benefits guide for their specific coverage.
Tech Products Advance Quickly
When considering an extended warranty for a phone, tv, or laptop, it may not be all that worth it because you'll likely want to buy a new one in a couple of years. With the rapid advancement in technology, newer models with enhanced features are constantly available; if you think you'll buy a new phone after 12 or 18 months, an extended warranty isn't necessary. However for an item like a washing machine which lasts for many years, you could consider an extended warranty after studying that model's reliability and reading the warranty's fine print.
US News Money recommends instead of buying an extended warranty, you should take the money that you would've spent on it and set it aside for repairs/replacement if/when needed. In the event that you will end up needing a repair, you'll already have money allocated for it.
Overall, don't stress about the extended warranty! If spending that extra $100 will make you sleep easier at night, then buy the coverage. But do know that for the vast majority of products, you won't end up needing it.