Skip The Extended Warranty And Save The Money Instead

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When you buy a big ticket item, extended warranties typically aren't worth it. Paying with the right credit card typically offers some kind of purchase protection. If you're still worried about your item crapping out, though, skip the warranty and save the amount you'd spend on it. Consumer Reports put together a massive buying guide for extended warranties. Overall, the found those plans rarely come in handy. Here's what they suggest instead:

Save the money you'd otherwise spend on service plans. Place it in a savings account, where you've socked away six months to a year of living expenses, or put it in a designated product repair/replacement fund. Then, when a product breaks, you'll have the money to repair or replace it. Of course, you first should try your other options, such as contacting the manufacturer or retailer if you think the problem was the result of a defect, or using coverage you may have from your credit card. Another benefit is that the money you've set aside will be available if you need it for some other reason, such as paying your living expenses if you lose your job.

As they suggest, this is basically like having an emergency fund. If you don't already have one, this is a good way to get started. You're probably fine just skipping the warranty altogether, but just in case, try to save what you'd spend on it. That way, if your product does crap out, you'll have a backup plan. Read Consumer Reports' full guide for more detail.

Extended Warranty Buying Guide |Consumer Reports via Apartment Therapy


Comments

    I don't know if this is targeted at the US but in Australia the current consumer warranty is based on the expected life of a product. So if a product fails outside the manufacturer's warranty period it can still be expected to be repaired if it's within its expected life.

    For example, spending $50k on a car and having it die 3 years later is inside the expected life therefor covered under consumer rights.

    Even though technically the law is on our side with statutory warranties, sometimes it's so much time and effort to make vendors do the right thing (they generally will eventually but not as quickly as they should). Sometimes it's easier going with the extended warranty just so you don't have to go through the whole painful process. I've had to hassle one lot about a sofa and it took months and was fairly stressful. If it was a TV, you probably wouldn't want to be without it for months.
    You get the feeling a lot of vendors make it deliberately difficult without the extended warranty.

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