Don't waste your money: extended warranties an even worse purchase this year
Filed under: Ripoffs and Scams, Shopping, Technology, Black Friday
Sure, the merchant you're buying that big LCD-screen television seems to be doing fine despite the economic downturn, but should you bet a great deal of money that it will still be around in a few years? Like CompUSA? That's what your doing if you buy an extended warranty, and last season 37% of those purchasing major appliances and electronics did, according to Consumer Reports. Store love it; they get to keep 50% or more of the premium, a much better margin than on the item itself.
Even the Consumer Electronics Association expects fewer of you to buy this option in 2008, and not just because you fear the company will go belly-up. Modern electronics are considerably more reliable, so many of us don't perceive a significant risk. The buying public is also showing a growing awareness that extended warranties are a bad bet; you're betting that the item will fail, while the seller is betting it won't. You're also betting that the cost of fixing the problem will be more than your warranty premium.
Face it: the company wouldn't sell the warranty unless the odds against catastrophic failure weren't in its favor.
This year, shoppers also needs to consider the dire outlook for companies such as Circuit City. If it goes down, will those warranties be honored? And while some companies sell programs that are actually run by a third party, this only muddies they question of whether or not it will be honored if the company goes under, or if the warranty provider goes bust. If it does, that warranty could be worth only the recycling value of the paper it's written on.



Reader Comments (Page 1 of 1)
11-21-2008 @ 12:50PM
brian said...
so you ask to bail out the big three today,an claim it is the Ameriacn way,,that being the casesell the jets an 75% of the workmust return or stay herein the good ole U.S.of A.so say we today!!!
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11-21-2008 @ 1:40PM
FB said...
Extended warranties seem to always be a waste of money.
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11-21-2008 @ 3:03PM
shawn said...
Isnt it amazing the people who tell others (since they have been to the mountain top and have conversed with God) that you shouldn't buy an extended warranty...are NEVER there when your car doesn't work properly and you need it to get to work. Or your fridge decides to spew ice cubes out at you like your back in school playing dodge-ball.
They are only money wasters IF you don't need them. Its a life saver (job saver) WHEN you need them. Just make sure it is from the manufacturer that makes the item your buying.
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11-22-2008 @ 1:56AM
Dan said...
Buy, buy, buy, we really need all that stuff, so much so that most of us have to park our cars in the driveway so that we can store all that junk we buy in the garage because the hosue is too full of all the consumer products that we really need to buy. As I look at all the retail merchandise discounted 60%-75% it strikes me that the price after discounting is really what the crap should be selling for in the first place. Much of it is clothing with designer names on cheap materials made in China or some third world country at slave labor wages by people who are being subjected to some of the worst pollution problems by manufacturing without any sane regulation, thought, or care about the long term effect on the enviornment. Most nonapparel items are cheaply made crap which is destined for the landfill as we head home with all those trash treasures. And almost everything especially toys has more creativitiy in the packaging than in the product. And we have sold out "American Made" for all that crap. Like Lemmings rushing off a cliff into the sea we Americans have to have the largest gizmo or gadget that the marketing industry tells us we need to have. The latest and greatest new drug the pharmaceutical companyies want to addict us too even the the side effects can cause stomach upset, nausea, drowsiness, potential liver damage. Our furniture industry that manufactured quality wood and upholstered home furnishings made by skilled craftsmen on American soil has been replaced by poorly made crap from china where the wood finish is such a poor quality that real wood grain is replaced with faux finishes painted thereon and most wood surfaces are painted dark or black to cover the fact that the wood poor quality and even in some cases compressed cardboard, fiberboard, of plastic foam painted over to look like real wood. So this black Friday I plan to walk the dog in the park, watch a movie, read a book, and work on Chistmas card mailings. Given where food prices are up and I'm sure we are still in for more gouging by gasoline suppliers I figure I'll skip the mall and let the Chinese head for thier unemployment lines too. It's time to pay the piper, last year's sweater and the old courdory jacket will do me well and I'll only spend money on things that I really need to have since I alreay have too much anyway. We can thank the Clinton and Bush Administrations for much of this mess we are in. We can thank the big three for passing the retirement problems down that they and the unions have amassed for 50 years that are now coming home to roost. The automotive bail out and Black Friday can kiss my grits, I'm staying home and saving my money for the rainy day and taking some groceries down the local food bank. Have a happy thanksgiving.
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11-24-2008 @ 11:23PM
PINKFLOYD said...
NO REALLY DO WASTE YOUR MONEY....that is what the FLAT PANEL makers are hoping you will do !!! Being an Entertainment Sales manager... I hear all the NAY sayers all day everyday and most of them are just NOT hearing the subjective testimony from those who have been BURNED by products that are NOT made in the USA and do NOT drive the US ECOMONY $$$. 1) Purchase of an EXTENDED warranty is really dependent on the product and making a blanket NOT WORTH IT statement is not only niave but factually unfounded. 2) LCD TV tecnology is only a little over 5 yrs old in the USA markets and changes about every 6-8 months with the newest model and discontinues making of the old including replacement parts. 2) Most of the consumer ratings are already out dated by the time you read them because a newer faster model is on the way to the shelf... the model you want was used and tested for 8months to rate it. 3)CIRCUIT CITY protection plans are serviced and insured by GE (Genereal Electric) and has no bearing on whether CC stays in business or not. 4) GO AHEAD and try and REPLACE an LCD panel or backlight for under $800 or $1200 depending on the size. 5) If you spend $1000 to $2500 on a FLAT panel and the likely hood that you will FORK OUT another $800 or $1200 to fix it 18 to 24 mos later is next to ZERO. I have seen it first hand with customers blessing me with HOLY water and thanking my like the the POPE because that $99 small LCD or $399 Large LCD extented warranty protection paid for it self 10 fold when the TV was fixed with no additional cost or completely replaced with the newest technology.... NO ADDITIONAL COST !!!!
BUT GO AHEAD DO WASTE YOUR MONEY BY NOT PURCHASING THE EXTENDED WARRANTY... THE BULGING FLAT PANEL WAREHOUSES OVERSEAS ARE BEGGING YOU TO ..... JUST BUY A NEW ONE, THERE'S PLENTY MORE....
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