The truth about extended warranties, and what to do instead

26 thoughts on “The truth about extended warranties, and what to do instead”

  1. I think folks will be much better off putting money aside in an emergency fund than buying a warranty plan. That said, my 5 year old tv started to show signs of dying just this week. Half the screen still has color and the other half is fading to black and white. Perhaps planned obsolescence…

  2. Good point. Back when I still rolled with a $600 iPhone I paid $100 for the warranty. Then one day kayaking the phone went overboard into the river, never to be seen again. The warranty didn’t cover lost phones now I was out $700 rather than $600. These days my phone’s cost as much as I paid for that stupid warranty.

  3. I bought a new car 2 years ago and they offered me an extended warranty for $1700 with a $200 deductible. This extended the bumper to bumper warranty from 60K to 100K miles. (My car already comes with 100k mile powertrain coverage etc.) I’m thinking i’m out $1900 before they will pay for anything. Certainly wasnt a good deal and I declined it. In most cases I’d rather take my chances and keep that money in my own pocket. The odds are definitely in the insurance companies favor or they wouldnt be doing it.

  4. I worked retail for a year in college, we would get in trouble if we didn’t pitch the warranty when selling tools or appliances. It’s shocking how many people actually buy them.

    Most of the time it was elderly women buying gifts that would pay an extra 5-8% for the warranty – even less of a chance they get used if it’s a gift

    1. Yup, me too. I worked at a camera shop in high school and the extended service plans were our largest sources of commission, BY FAR. Funny how that works. 🙂

  5. The best warranty we ever purchased was for our dining room furniture. We purchased Scotchguard application to protect our furniture from stains. What did this do? We had an incident where juice from over exuberant slicing into a haggis while celebrating Burns night ( yes, you read that right- haggis) splattered all over the seats of our dining room chairs. A fountain of juice spewed from the knifed haggis. The stain could not be removed by our considerable efforts or the cleaning company from the furniture store. We got brand new chairs for the princely sum of about $70 for the Scotchguard warranty.
    Of course, if you are like most folks, avoid eating haggis and this type of caper can be avoided.
    Kind of ironic it was SCOTCH guard that protected us from the haggis fiasco……

    1. Wow! Yeah, that is an interesting scenario – can’t say I’ve heard about anything quite like that before, though. But hey, the at least the warranty worked for ya that time! 🙂

  6. We don’t do extended warranties for all the reasons mentioned above. We were tempted to get one on our refrigerator when we first got it because it was a big purchase, and we hadn’t made many of those yet at that point, but after running the numbers we decided we’d gamble and not get it. 8 years later it is still running well, although I probably just jinxed it, and no warranty was used. The same with out first big TV purchase, Mrs. SSC was debating the extended warranty, and then realized our credit card covered it for the same amount of time, so hooray for credit card coverage!
    My FIL recently bought a new Subaru Outback with all the technology available and he got the extended warranty mainly because it covered the elctronics for another few years. Since it has adaptive cruise control and 16 other radar like gadgets running in it, he figures it’s peace of mind if/when one of them breaks, because they are not cheap to replace!
    On a related note, I also still get calls for my Camaro on extending the warranty and I haven’t owned it for 3 years now. So annoying.

    1. Good on you for not getting screwed over with a warranty. I had thought about just telling them that I no longer own my CTS the next time that someone tries to sell me on a warranty, but looks like even THAT won’t work. 🙂

  7. I remember a time about 10 years ago when a major UK electrical retailer nearly went under, profit on sales was way down and they were facing bankruptcy, all that kept them afloat was the profits from the extended warranties and they are still wit us today. Enough said!

  8. Yep, very few warranties are worthwhile. Liz Weston did a good piece for either her site or MSN Money a few years back about which ones are worth it.

    One of the few I’ll buy is a Best Buy computer warranty. We do have to use those for repairs sometimes. My computer’s screen died about a month after the manufacturer’s warranty pooped out, and we’ve needed tech support two or three times since I got the damn thing.

    1. Yeah, computers can definitely be a crap shoot. Sometimes warranties work, sometimes they don’t. I don’t buy warranties on computers either, but I can see where they might become worth it for a lot of people!

  9. I couldn’t agree with you more. Businesses are, above all else, working for money. It’s important to be mindful of the ways warranties work and what they actually cover. Setting extra money aside to take care of emergencies when they strike is a really great suggestion; you’ll certainly be glad you have that fund if an accident ever ensues! Nice points you make here! Thanks so much for giving your insight!

  10. A friend of mine was unlucky enough to have both her fridge and chest freezer die within a few days of each other. She went to an appliance store and purchased both a new fridge and chest freezer. She mentioned to the sales women that her manager would be happy that she made such a big sale. The sales women was honest with my friend and said “my manager won’t think I did a good job at all because I didn’t sell you the extended warranty.

    1. Wow, that puts things into perspective, doesn’t it? It’s not enough to just sell appliances. You gotta sell those high-margin warranties, too. 🙁

  11. Buying a warranty can be a gamble. I recently began opting out of extended warranties on my smartphones and laptops. This can be risky with technology but I found a local repair shop that would fix my devices cheaper than what the warranty would cost me. Thanks for sharing.

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