Whenever you’re making a major purchase you’re often asked if you’d like to purchase an extended warranty. An extended warranty acts just like an insurance policy for consumer purchases – if your brand new washing machine or TV set stop working once the manufacturer’s warranty is up, you’ll still be covered
Retailers offer extended warranties for a good reason –they’re a great way to boost profits. Do you really think retailers would offer extended warranties if they were causing them to lose money? Of course not! Before you sign on the dotted line, take a moment to think. Here are a few reasons an extended warranty may not make sense.
The Manufacturer’s Warranty is Usually Good Enough
Almost all products from refrigerators to TV sets come with a standard manufacturer’s warranty. It’s pretty standard for the warranty to cover your purchase for parts and labour for a year. Since most consumer products experience minor breakdowns in the first year, while more costly problems usually happen many years later, an extended warranty is simply an overpriced insurance policy you’ll probably never need.
Extended Warranties Don’t Cover Everything
Before you sign up for an extended warranty, be sure to read the fine print. Extended warranties don’t necessarily cover everything – in fact, there are often many instances where you’re not covered. That’s right, your brand-new TV set might break down and you may not be covered even though you forked over $50 for the extended warranty.
Depreciating in Value
Have you heard of the old saying that a car loses half its value when you drive it out of the dealership parking lot? The same can be said for consumer electronics. With the advancements in TV sets, laptops and Blu-ray players, in two years’ time, you may be able to purchase a brand-new product similar to your own for the same price as your extended warranty. Instead of wasting your money, pocket your cash instead and save it for a rainy day in case your new TV set dies.
You May Already Be Covered
If you are using a credit card to pay for your purchase, they might also provide insurance in many cases. If you pay for a product with your credit card, the manufacturer’s warranty is often doubled in length. How do you know if you’re covered? It’s important to read your cardholder agreement to find out or you can contact your credit card issuer. This should be more than enough coverage without an extended warranty in most cases. Using your credit card can also be a good way to earn reward points but it is always important to make sure you have enough funds to pay off your credit card in full after the purchase to avoid heavy interest.
Products Rarely Break-Down on Their Own
Consumer Reports did a study that said between 5 and 37 percent of small electronics and home appliances break down. In fact, many products break down through wear-and-tear and negligence, which of course isn’t covered under an extended warranty. Before you spend your hard-earned money, ask yourself if you feel lucky – chances are your product won’t break down any time soon!