Do you really need that extended warranty?

You know when you buy electronics, the sales people try to up-sell you with a ‘fantastic, life-saving warranty’?  Is it a good idea?  What are you paying for?

Let’s explore this warranty.  First, you should know that almost every electronic device comes with a 1 year manufacturer’s warranty for defects and failures and some cover labor.  Basically, if it breaks on it’s own or because of the manufacturers fault, your covered.  Some companies even pay for return shipping and allow you to return it to the place of purchase to swap it out.  Second, when you pay, you should try to pay with a credit card–even if you have cash.  Why?  Because most credit card companies will stand behind a purchase made with them and if the manufacturer will  not help, you may be reimbursed for the purchase.  A good policy is to always try to buy any electronics on credit (not debit) then pay the credit card bill with the cash you were going to use originally.  So that’s about it–a pretty generic warranty.

But what if it breaks  because of you?  Whether water damage, a laptop that fell, fire damage and more, this is where the extended warranty comes into play.  But be warned!!  The majority of these have very specific requirements and you are at the mercy of the company that sells the warranty.  Most extended warranties are not sold from the manufacturer; rather through a 3rd party (think Sony TV and xyz warranty services)  These 3rd party companies set the rules and guidelines for what is covered, what isn’t covered, and everything in between.  You might be thinking “wow!!  I can buy a new electronics device and be covered no matter how it breaks!!”  Whoa–not exactly.  You should know that even if these so-called extended warranties claim to cover specific damage like water damage, it’s not always a guaranteed thing.  Again, you are at the mercy of the company and they have the final say.  The thing to keep in mind is that 1) extended warranties are designed to bring in more profit and 2) anytime a company has to spend money to fix something they didn’t plan on, they don’t like that.

I personally always declide extended warranties.  Most electronics will fail within the first year, if they fail at all.  As for the user-caused damage, you can almost always find companies that can fix specific issues for cheaper than the cost of the warranty and older electronics are always coming down in price and newer electronics arrive.  Also, remember that just because it says it is covered doesn’t mean your home free.

So do yourself a favor and decline that extended warranty.  Remember that golden rule:  If it sounds too good to be true, it probably is.

Hope you enjoyed this article.  Feel free to leave your comments below!