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$1.6 Billion Down The Drain

By , November 14th, 2006 | 8 Comments »

Extended WarrantiesThat is what Consumer Reports is saying people will waste on extended warranties for various electronics and appliances this holiday season.

I have said in the past that in most cases, extended warranties are not worth it. The reason that the sales reps push them so hard is not in your best interest, but because they make a huge amount of money on them. On the money you pay for the warranty, more than half can get kicked back to the store selling the policy which means that in many instances, the store makes more selling the warranty than actually selling the product.

Two possible exceptions to this rule of passing on extended warranties noted in the article were rear-projection microdisplay TV (costly to repair and need to be repaired 300% more frequently than other TVs) and Apple Computers (because it also includes tech support)

The best defense against needing extended warranties is to purchase quality products that have a record of lasting and not having trouble. You may have to pay a bit more for these, but often times it will end up being less if you factor in not needing an extended warranty compared to a cheaper model that does need one. It also pays to find products that come with a quality manufacturer’s warranty (this is getting harder to do as many manufacturers are cutting their warranties to save money, but research should turn up some that still stand behind their products).

If you purchase a lot of electronics, your might consider what one of my friends did. He upgraded from a standard credit card to a higher level credit card that offered a superior extended warranty service on all the items he purchases using it (many credit cards do offer extended warranties with “gold” and “platinum” credit cards often coming with them). Knowing that you have this extended warranty already in hand when you go to purchase products makes it much easier to brush aside the hard sell sales pitch.

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  • Mike says:

    I agree with what you say, but I think you should get an extended warranty for laptops.

  • Investorial says:

    *chuckle* I read this article because of the title, for a moment I thought you were saying the Google purchase of YouTube for approximately $1.6 billion went down the drain… ๐Ÿ™‚

    To stay on topic, I don’t remember ever wanting to purchase extended warranty for anything!

  • fractalbrothers says:

    I hate to be the spelling nazi, but you misspelled “warranty” in your image.

  • Steve says:

    Good article. I think warranties on laptops are important, as well. But keep in mind don’t go too long because most people buy new laptops frequently.

  • pfadvice says:

    I hate to be the spelling nazi, but you misspelled “warranty

  • Barbara says:

    I agree for the most part, however I have found on a few items – such as my really high tech fridge that it has been worth it. We purchased a 5 year for 165.00 and have had 4 service calls, just for a “motherboard”. It would have cost us almost the total cost of the fridge if we had NOT purchased the warranty. Also, we have the Apple laptop – WORTH THE WARRANTY!!!

  • Johnnie Nomad says:

    Hahaha, a warranty not a good idea for electronics? That is not very good advise, sorry. There has been a few times where the extra warranty has saved me $$ and headaches.


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