Skipping Extended Warranties

 

As Americans add more electronics and other products to their lives protecting those investments with extended warranties has great allure.

The industry has capitalized on that to the tune of $25 billion a year.

In many cases, however, that added coverage does not make sense says CNET.com's senior editor, Dan Ackerman:

[Dan Ackerman, Senior Editor, Cnet.com]:
"I think anything that's generally inexpensive, maybe under a $1,000, for a product outside of an Apple product you wouldn't want to get an extended warranty. You're basically making a bet that something will happen to your device. You're better off just saving that money and putting it towards your fund for whatever the next generation of whatever you're going to buy is."

Ackerman says Apple products are an exception because their proprietary technology makes them hard to service.

But statistically most products won't need repairs. Data from Consumer Reports shows while a third of all computers do require service in their lifetime, just over ten percent of all dishwashers will and fewer than a tenth of all digital cameras.

And if an item does need repairs, statistically the problems surface early on and are still covered by the manufacturer's warranty.

Still, it's worth checking that warranty to see if something like loss, theft, or accidental damage is not offered. Often credit card companies provide that coverage if consumers use their card to buy the product.

Steve Abernethy CEO of SquareTrade, which sells extended warranties, says either way buyers have a choice.

[Steve Abernethy, CEO, SquareTrade]:
"The key thing is that consumers should realize they have control. Don't feel pressured in the holiday shopping season by the checkout clerk trying to say you shouldn't walk out that door without that warranty. Take your time. You've got 30 days you can go to SquareTrade or you can go back to the Best Buy and buy the warranty then."

Some people will always want that extra protection regardless of cost, feeling peace of mind has no price.